Though the decision to buy or lease a car has financial implications, money isn’t the only reason you should take into consideration before making a decision. Factors like your personal taste and lifestyle also come into play.
Whether you choose to buy a car or lease your next car ultimately depends on your budget, goals, and personal preferences.
Both leasing and buying cars have their benefits; the important thing is deciding which of those benefits holds more weight for you.
Let’s delve into the major pros and cons for each side of the lease vs. buy debate and in the end you can make the decision which option appeals the most to you.
Leasing a Car
No Loan Approval Required
Leasing does not require stringent credit requirements for you to be approved for a car loan or paying outrageous amount of interest if your credit score is less than stellar. Leasing companies are normally not as strict as lenders because they have the option of easily taking back the vehicle if you don’t make payments or violate any lease term.
Lower Monthly Payments
The cost of leasing a car is typically much lower than buying one. Little or no down payment is required, and you certainly don’t have to pay any upfront sales tax.
No “Upside-Down” Situation
When you lease a car, you rent it for a fixed term, which is usually1 to 4 years. You only pay for the depreciation of the car that occurs during your lease term and you can never be “upside-down,” a common situation where vehicle owners owe more than their car is worth.
Always Driving a New Car
If you lease a new vehicle every few years, you have the benefit of always driving a new car with the most up-to-date technology, safety features and comfort. Once a “closed-end” lease term expires, you simply initiate a new lease agreement for a different vehicle.
Buy a Car
Paying Less Over The Long Term
While monthly lease payments are generally less costly than monthly car loan payments, still with each loan payment, you can build up equity for the future when you decide to trade it in or sell it. Buying a vehicle and driving it for a number of years after you pay it off can be the cheapest way to own a car.
Option to Sell
As a car owner, you have the option and flexibility to sell it or trade it (and pay off any existing loan balance) at any time. Unlike leasing, you are not locked into a fixed ownership period before you can dispose it off.
No Mileage Limit
Owning a car has no limitations on mileage, you can drive your car as many miles as you want. Leases on the other hand put a cap on the number of miles you can drive and charge a hefty fine when you exceed the limit.
Yes to Modifications
If you want to accessorize your car or add/modify features that will make it run in perfect condition, then buying a car is your best bet. A lease comes with restrictions to modifications.
So, there you have it. Have you made your choice yet?