Buying Vs. Leasing
Should I Buy Or Lease My Car?
Congratulations: you’re ready to buy a new car! Now you have some big decisions to make—and not just whether or not you want leather interior. One of the most important choices you have to make is how you are going to finance your car. Buying and leasing are both good options; it just depends on your specific situation and needs. Understanding their differences will help you figure out which would be the best choice for you.
When you opt to buy rather than lease, you are the car’s official owner, which is an advantage because this means you are free to use or modify your car however you’d like. Buying a vehicle does mean your down payment and monthly payments will be more expensive than if you leased that vehicle, but many people consider this to be an advantage in the long run because at the end of the payments, you will have fully paid off your car.
To lease a car means that you are essentially renting it for approximately three years. Many people are drawn to leasing a car because a lease typically yields lower monthly payments, as well as a lower down payment than if they were to purchase the car. This means that nicer, more expensive cars that you may have thought were out of your price range are actually well within your reach. By leasing, you also save money on your car’s sales tax, since you will only have to pay sales tax on the financed portion of the car. Additionally, with a lease, you typically save money on any car repairs: most leases last around three years, which is the usual length of most new cars’ warranties, meaning that nearly every repair will be covered under warranty for the duration of your time with the car.
Leasing a car does, however, have its disadvantages. For starters, when your lease is up, you don’t own the car. Instead, if you cannot afford to purchase this car at its residual value, you’ll have to start up another lease for a different car. If you buy your car, once you finish making your monthly payments, you then own your car. Another downside to leasing is that a lease restricts the number of miles you put on your car each year. If you go over the mileage limit you agree to in your lease, you will be charged by each excess mile when your lease ends, so part of leasing a car is paying close attention to the distances you’re driving.
Which Is Better?
Choosing your financing method essentially comes down to your personal preferences. If driving a newer, nicer car is more important to you than the freedom to take your car on a cross-country road trip, leasing may be the right option for you. On the other hand, if you want the flexibility to not only drive your car as far as you want but also to make any modifications or sell the car whenever you want, buying is probably the better choice.