If you are looking for a new car and are not sure how to approach the situation, we are here to help you decide. Read on to find out if it is smarter to lease or buy a car.
Should You Lease or Buy a Car?
This decision depends entirely on your budget, goals, and personal preferences. Both have good and bad sides, so the key is what suits you more. Before you explore the market, you must first know what you need and want from your next car. Of course, you should also determine how much money you are willing to spend. Following are the benefits for bot leasing and buying a car to help you make the right decision.
Benefits of Leasing a Car
Lower monthly payments
On average, it is cheaper to lease a car then buy it, as there is very little or no down payment at all. There are also no taxes to pay upfront. One tricky side is when returning a car, you may need to pay some extra fees for mileage above the limit, ending the lease earlier, or leaving some damage unrepaired.
Never being “upside-down”
The terms are fixed and last between 1 and four years, on average. Each month, you only pay for depreciation during your lease term, so you can never really be “upside-down.” This is a common and a bad situation when the owners owe more money than the car is actually worth.
Fewer repair expenses
If you have a manufacturer warranty coverage during the lease term, you do not have to worry about unexpected repair bills. You are however still responsible for the regular upkeep and maintenance of the car, as well as the minimum amount of car insurance required.
Driving a new car more often
If you start a practice where you lease a new car every few years, you will basically always drive new cars with the newest features, technology, comfort, and safety.
Never having to sell a vehicle
When your lease term expires, you can return the car or choose a new lease for a different one. Therefore, you do not have to worry about selling the car and all the issues that come with it. You also have the option to but the vehicle when the lease expires. This is great if the price is less than the car is worth, and bad if it is the other way around.
No loan approval required
If you do not have a steady credit, an approval for a car loan might never come. In addition, you might have to pay a huge interest. Leasing companies are not that strict, as they have the ability to take the car away from you if you do not pay, or otherwise violate the deal.
Benefits of Buying a Car
Paying less over the long term
Although lease payments are less expensive than loans, with loan payments you are free to build equity for the future when you decide to either sell or trade it. The overall cheapest way to buy a car can be to buy it and own it for several years. It costs less and less the more you drive it.
Have the option to sell it
When you own the car, you always have the ability to sell it or trade it if you have to or want to. There is no deal or a fixed term to follow.
No mileage limit
If you will drive a lot of miles and want to have no limit on this, owning a car is the better way to go. Leases tend to limit miles, and you have to pay hefty fees if you go over them.
No restrictions on appearance
If you must or want to use your vehicle without keeping it in perfect condition or care for it too much, buying the car and owning it is a much better and safer solution.
Discount the depreciation
On average, between 20% and 40% of the depreciation of the car can occur in the first few years. Therefore, when you are buying a 2-3-year-old-car, you will get the advantage of a price tag reflecting a substantial discount on the depreciation.
We hope we helped you make the decision on whether to lease or buy a car. Remember to explore your needs and pay attention to all the factors. It will be much easier to decide because not everything works for everyone.