If you’re in the market for a new vehicle, November is typically a good time to score a great deal because dealerships are receiving new 2014 models. You may also be wondering whether to lease or buy. Leasing a vehicle used to be commonplace only for businesses because of the tax write-off. However, with deals like zero money down, low monthly payments or zero-percent interest, leasing has become a popular, attractive option for the general public. In fact, shoppers are turning to leases more than ever, according to Edmunds.com.
The Oklahoma Society of Certified Public Accountants offers some insight while comparing the options with leasing versus buying a car:
Evaluate the situation.
• How is your cash flow? If you’re short on cash, leasing may make more sense because you’ll typically be required to put less money down.
• Are you a new car junkie? Leasing will provide you with a new car every few years.
• How many miles do you drive each year? A typical lease customer drives 15,000 miles each year. If you drive substantially over or under this amount, leasing may not be for you.
• Do you use your car for business purposes? If you are deducting a portion of your car’s depreciation from your taxes, you will be able to deduct substantially more if you lease. Interest paid on loans to purchase a car is not deductible. When you lease, you can deduct depreciation as well as the financing costs. The IRS limits depreciation deductions for certain luxury cars.
• Are you hard on your car? If so, leasing may not be right for you because the wear and tear may trigger damage fees at the end of the lease.
Whether you lease or buy, a car is a big investment. A CPA can help you analyze your current situation and determine the best course of action with regard to your personal financial plan.