One of the hardest questions facing consumers is whether to lease or buy a car. Most people who are looking for a new car do not have enough cash to buy the vehicle outright. In most cases, consumers either obtain an auto loan or lease the vehicle.
Buying a car is one of the biggest investments a person will make in their lifetime. While considering such a large investment, it is important to take the time to shop around, comparing what is available on the market. Both buying and leasing a vehicle have advantages and disadvantage. Here are some tips to help you determine which is the best financing option for your new car.
One of the biggest advantages to leasing a car is the lower cost. There is little to no downpayment required, and routine maintenance is more affordable. Typically, monthly payments are lower, and you have the pleasure of enjoying a new car every few years.
When you opt to lease a car, it is comparable to renting the car for a specified number of months. In most cases lease contracts run between thirty-six to forty-eight months. The best part about leasing is that you are paying to use the car during the agreed upon length of time without the consequence of depreciation later on.
Leasing is a great alternative to buying a car. The majority of financial institutions will not provide a car loan exceeding $30,000. If the vehicle you are looking at is valued higher than $30,000, you may want to consider leasing over buying.
One of the major downfalls to leasing a car is that you will always have a car payment. As long as you are leasing, you do not own the vehicle. Depending on your lease contract, you can either exchange the car for a new one when the lease is over, or you can finance the remaining value of the car with a loan.
The best part about buying a car is that you own the vehicle when the installment loan is paid off. Once the payments are completed, you are free from having a car payment each month. This means once the car payments are completed, you can sell the car at any point in time, without facing any repercussions.
While those who lease a vehicle may have lower monthly car payments, those who buy a car tend to have lower car insurance rates. Best of all, there are no restrictions placed on the mileage you can put on the car if you buy it.
The major disadvantage to buying a car is the higher monthly payments. Dealerships usually require a down payment, forcing the out-of-pocket expenses to be higher than if you were to lease a car.
When it comes time to make the decision to lease or buy a car, you need to evaluate your personal circumstances. If you want to the car to be yours, then you should consider buying a car. Those who prefer to drive a new car every couple years may want to consider leasing.