The purchase of a new car, truck, or other vehicle is a serious commitment. For most people, a car is only surpassed by a mortgage in terms of the cost of the investment, making it very important that you select the right car and the right terms. Ultimately, different people may have life situations that necessitate different types of loans and car arrangements. For some, leasing a new car may be the best option, while others may benefit from an outright purchase. Which option is better for you based on where you are in life? Keep reading to find out whether you should lease or buy if you’re in the market for a new car.
Advantages to Leasing
With so many automobile leasing options, it’s easy to become confused over what actually are the benefits of leasing. Most notably, leasing provides people with flexibility. Rather than committing to monthly payments for five years or more, most leases last two to three years. Once the term is up, you can bring the car back, walk away, and pick out a brand new vehicle.
Because of the way leasing works, your payments are based on the expected depreciation of the car’s value over the term of the lease: this means your monthly payments will be much lower.
Disadvantages to Leasing
A new car lease isn’t rosy in every respect. For some people, leasing simply isn’t an option. Whether you’re looking for a new Dodge truck or some BMW lease deals and specials, certain restrictions apply.
One reason why a lease may not be right for you is the limited amount of driving you can do. For most leases, there is usually a limit of 10,000 to 15,000 miles per year that can be put on the vehicle; any more than that and the dealership will begin to bill you per mile. These per-mile fees are very expensive (in some cases, as much as a quarter per mile).
In addition, any damages or maintenance issues will be your liability at the end of the lease. Likewise, if you do not follow the regular maintenance schedule mandated by the dealer, then you can be on the hook for more money as well.
Advantages to Buying
Arguably the biggest advantage to purchasing/financing a car outright is the freedom to do what you want. Take those cross-country road trips, drive through the mud and go as fast as you feel like: it’s your car!
It’s also worth mentioning that once the car is paid in full, you won’t have to worry about any monthly payments for the remainder of the life of the vehicle.
Disadvantages to Buying
Buying a new car can leave you exposed in some areas. For example, the resale value of the car can change dramatically over the years that you own it, meaning that you will not be able to recoup most of the value of the car if you sell it past a certain point.
If you are cash-strapped, then buying a car outright may be difficult. Most dealers require substantial down payments and that may prove to be an obstacle.
Now that you know the differences between leasing and buying/financing a new car, you can make the best decision for your lifestyle and needs.