New car models for 2025 have just arrived at the dealership showroom, and 2024 and 2023 models should be priced a bit cheaper now. Have you noticed though, whether you are in the market for a new or used, inflation has intensified your sticker shock?
Choices and Options
If you are thinking of acquiring a vehicle, your only choices are either to lease or purchase. According to Kelly Blue Book, your average new car transaction cost is $48,644, while it was $38, 530 about four years ago. Along with the cost being significantly increased, comes with the reality according to Edmunds, an online car resource; the interest rate on a new vehicle is 7.3% and the average monthly car note is $740 for almost six years. I don’t know about you, but six years seems almost unconscionable when it comes to paying a car note. After all, if the average mortgage is 30 years, one fifth of your mortgage years are spent on the purchased vehicle. And unfortunately, you cannot sleep or shower in your car.
If purchasing a vehicle is a must for you, then you may want to consider a used model that will lower the cost significantly. While SUV’s are popular for safety reasons, according to the Insurance Institute for Highway Safety some of the safest vehicles are small cars. Not only are they economical on gas, the insurance cost may be lower.
Leasing Option
It would appear that leasing is making a comeback, or is fast becoming a more attractive option for more Americans. Leasing has increased from 19% in early 2023, to 24% in early 2024. The average payment on a new leased vehicle in early 2024 is $595. While the monthly savings can be $100, leasing can be tricky.
If you are the type of person who wants to trade in your vehicle every three years and drive more current models, leasing will work for you. However, if you are always leasing, be prepared for never ending car payments! The fact is that in the long term leasing may cost you more that purchasing your vehicle. With leasing comes additional fees such as for excess wear and tear, and a disposition fee. Further, there are often penalties of at least 15 cents per mile for mileage in excess of the leased agreement limit.
Think it Through
Purchasing or leasing a vehicle is a mixed bag. Leasing does have great benefits, but in order to really maximize your benefits, you should be a business owner. Using the business lease option, can also aid in deductions when it comes to reducing taxes with our favorite agency – The IRS. Here’s an example of what I mean. Under the current tax code or laws, you have wider eligibility opportunity, if you lease an all electric vehicle or plug-in hybrid than you would if you purchased the vehicle. The federal clean vehicle tax credit of up to $7,500 is more beneficial to leased EV’s and plug-in hybrids since they are classified as commercial vehicles. This helps these vehicles qualify without the income, pricing or sourcing issues that would arise if you had purchased the same vehicle.
Finally, according to AutoTrader, the best times to purchase a vehicle is the end of the quarter and end of the year. Best days, Mondays and worst days Saturdays.
WHAT’S UP!
Today’s What’s Up is about tax filing deadline. For all the people who wait until the very end to make peace with the IRS, having filed their April 15, 2024 extension for tax year 2023; the deadline is October 15, 2024. If you are expecting a refund, this deadline is not relevant. If not- it’s time to pay the piper or at least establish an installment agreement. And that’s what’s up!
Ruthven R. Phillip, Esq., is a tax attorney, Stewardship and Philanthropy Ministry Assistant, and CEO of Give2Getrich, LLC. Give2Get Rich, LLC 2024. All Rights Reserved. Any distribution or reproduction of part or all of the contents in any form is prohibited.
