Deciding what kind of vehicle you want next is both exciting and stressful. The type, color, gas mileage, and features of the car matter to those purchasing a new car. However, people often do not consider whether they want to buy or lease their next car. The decision to buy or lease a car comes down to your capabilities and preference.
Whether you lease or buy, there is usually down payments, financing, and other taxes and fees associated. These payments differ greatly, which is why this decision comes down to capability and preference. Either option comes with pros and cons; this post will discuss and compare them.
The newest cars come with the latest technology and safety features, and of course a large price tag. If you are a person who enjoys driving the latest models but doesn’t love the price, then leasing may be for you.
When you lease a vehicle, you are essentially renting it for the contract period. Similar to renting an apartment, you do not own the vehicle and there are on what you can do with it. For example, there are mileage caps, which charge you for going over the cap. Another restriction comes with insurance costs, and a lender will require you to take out full coverage for the vehicle.
On the other hand, leasing a vehicle means having low monthly payments, low down payment, and the chance to drive newer vehicles. A typical lease runs about 2-3 years, which means you can find something else you’ve always wanted to drive. Leases certainly give you more freedom in terms of changing up your vehicle, while being cost-effective.
Most people attempt to buy a vehicle before they try leasing one. Buying a car means owning it, having the freedom to customize it, and you being able to sell or trade it in. If you are someone who enjoys sticking with a reliable vehicle, then buying is for you.
When you buy a car, you have the freedom to do what you want with it. Pending any financing, you may own the title, which means you have the right to sell or trade it in if you choose. You can customize a car you own, and title holders can choose how they want to insure the car.
While buying a car has its benefits, it always comes with a large cost. when you buy a vehicle, you are paying the full price right away. Accomplish this through cash, financing from a lender, or trading in an old vehicle. Many people use a combination of the three, but you are usually left with large monthly payments.
Leasing a vehicle keeps costs down, but at the end of the day, you don’t own that vehicle. Not owning the vehicle means you have no trade-in value and have to head into the next contract with no fresh capital. People that lease their vehicle have to be more careful because they will pay large costs if you damage the car.
However, buying a vehicle means you are sticking with the same car and large monthly payments for a while. In addition to loan interest, if you finance, there is the sales tax, and depreciation lowers trade-in value.
Take Home Message
Neither option is cheap, but some options are better for certain budgets. If you like flashy cars and can afford the insurance plus other fees, then leasing is for you. If you want something reliable for right now, then buying is for you.
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If you’d like to take a look at more blogs about proper car maintenance, we have a bevy of them on our website. Consider taking a peek at these before you leave: