Leasing VS Buying a Car
When in need of a new vehicle, many consumers have difficulty deciding whether to lease or purchase. When an individual leases a car, they are agreeing to drive the vehicle for a predetermined amount of time and pay a monthly fee for that use. Once the leasing period is over, a driver may then decide to purchase the vehicle, extend their lease, lease another vehicle, or purchase another vehicle.
Additionally, many consumers have been warned never to lease a car, as it is more expensive than buying. However, this is not always the case. Drivers also worry that they will have nothing to show for their money at the end of their lease. This leaves many drivers uncertain of whether purchasing or leasing a vehicle would most benefit them.
The Advantages of Leasing a Car:
Contrary to what many are told, there are benefits to leasing a car in certain situations. When an individual leases a car, their payments are based on the car’s projected depreciation during the leasing period. Drivers that decide to lease, instead of buy, are generally offered lower payments. In fact, the monthly cost to lease a car is usually anywhere from 30% to 60% less than when purchasing the same vehicle.
Another common benefit of leasing a vehicle is that drivers are not required to pay for repairs when the car is under lease. Therefore, if a car’s brakes or transmission were to go out, the leasing company would be required to pay for the repairs, since they legally own the car. However, if a driver were to get into an accident and damage the vehicle, they would then be responsible for fixing the vehicle.
The Disadvantages of Leasing Compared to Buying:
When a consumer purchases a vehicle, they are making an investment. While their payments may be higher than when leasing the same a vehicle, these payments are building equity in the car. If a consumer decides to sell their car, they will have built up equity that they can use to purchase a new vehicle. On the other hand, when a consumer leases a car, they must return the car at the end of the lease. If they choose to purchase the leased car or another vehicle, they will have to come up with the down payment on their own.
Additionally, while leasing a vehicle is less expensive initially, it is more expensive over the long term. If a consumer were to only need a car for two years, it would be cheaper to lease. However, if a driver needs a car that they can drive for ten years, then it will be less expensive to buy.
Whether a consumer should lease or purchase their vehicle really depends on their preferences and individual needs. If a driver needs an affordable car to get them through a tough financial situation or simply likes getting a new car every couple of years, then a lease would be beneficial. Drivers that want a car to call their own, one that they can modify and drive as long as they please, would benefit more from purchasing. There is no right or wrong decision between leasing and buying. Consumers simply need to consider their budget, preferences, and lifestyle, before making the choice that is right for them.