Car lease or purchase: how to choose which is best for you
Both alternatives have their pros and cons. Choosing between leasing or purchasing a car is more than just a financial decision. Many other factors come into play – what you want from your new car, what are your driving habits, and even your lifestyle in general.
Read on to find out how you can choose which option is the best for you.
Monthly costs
If the money is tight, leasing a car could be the better option for you. When you lease a vehicle, you are essentially renting it from the dealer for as long as your lease lasts. Sometimes, a leasing agreement includes an initial down payment, but that is not always the case.
Monthly lease payments are typically lower than auto loan ones because they’re based on a car’s depreciation during the period you’re driving it, instead of its purchase price.
While this option might seem attractive in the short run, keep in mind that you do not own the vehicle once the lease is over. Some companies offer you the option to buy the car you’ve been driving once the lease is over, though, so you could consider the lease period as an extended test ride. In the end, you can buy the car if you like it, or you can exchange it for a different model on the spot, hassle-free.
Wear and tear
It is essential to consider your commute and your lifestyle in general when making a choice between buying and leasing a new car.
If you live in a crowded city, or if you frequently drive long distances, this increases the odds of your vehicle suffering some significant damage, not to mention occasional bumps and scratches.
If you lease a brand-new vehicle, it will likely be under warranty for the duration of your lease. But you may still have to pay for maintenance and repairs or even be required to replace worn tires, scratched windows, or other blemishes when you return the car.
On the other hand, if you buy a car, keep in mind that repair costs are most likely to go up as the vehicle gets older. A significant amount of your budget will go to regular car maintenance and upkeep.
Mileage limit
If you are someone who drives tens of thousands of miles annually, car leasing might not be the right choice for you.
Auto leases usually come with mileage limits, typically set between twelve and fifteen thousand miles per year for a standard lease. Going over that number could mean being penalized at a rate of about 15 cents a mile.
Even so, some car dealers offer different deals and packages, so make sure that you are familiar with all the available options before you reject car leasing as a viable option.
You should be aware that mileage matters even if you opt to purchase a new car since the car’s warranty is tied to its mileage.
Flexibility
Suppose you are one of those folks who cannot stand the idea of driving the same car for more than a few years. Maybe you want your vehicle to have all the latest features of car safety and technology. Perhaps your job is such that presentation matters and you need a new set of wheels every year. If this sounds like you, car leasing is your ideal option.
But, If you get tired of your car or your needs change during the lease period, you may want to think twice about turning the car in. If you’re going to break your lease early, you could be on the hook to pay some steep penalties. Or you could even be required to cover all of the remaining lease payments and pay additional penalties on top of any other fees.
Fewer worries about selling your car
When you buy a car, you are the owner, plain and simple. This means that you can sell it whenever you want, unlike someone who has leased their vehicle.
However, selling your car or trading it in can be a long and gruesome process. Those who choose car leasing need not worry about these matters. Once your lease is up, you can simply choose to pay to keep that same car or start a new lease right away. The entire process is much smoother and hassle-free, so consider this when choosing between these two options.
