The decision to buy or lease a car is not easy. There are multiple factors and considerations that should be taken into account. And surprisingly enough, money is not the only thing that can determine which route you are going to take.
For instance, your lifestyle and personal preferences have an impact on your decision. Whether you lease or buy a car actually depends on the manner you want to acquire your desired unit.
Let us examine the respective advantages of both of these options. In this way, you will be able to decide properly.
Benefits Of Leasing A Car
- Low Monthly Payments – Keep in mind that the cost of leasing a vehicle is lower than buying one. Most of the time, little to no downpayment is required for the lease. Moreover, there’s no need for you to deal with upfront sales tax. But once you return a leased vehicle, you will need to pay the extra charges due to exceeding mileage, damages, or terminating the lease earlier than the contract.
- No Upside-Down – Whenever you lease a car, its rent will be fixed. Usually, the term lasts for four years. Meanwhile, the amount that you need to pay monthly is the very amount of depreciation calculated during the lease term. Hence, you only need to pay for the depreciation of the vehicle that happened during the term of the lease. There’s no “upside-down”–a situation where a person has to pay the amount that is bigger than the worth of their car.
- Minimal Repair Expenses – Most of the lease terms have a manufacturer warranty. Therefore, any accidents you encounter in the road can be covered by it. You may still need to pay, though, but the cost is pretty minimal. However, keep in mind that you are the one responsible for maintaining the insurance policy.
- You can drive new cars frequently – One of the biggest benefits of a lease is the opportunity to drive new vehicles every few years. It is within the policy of the service providers to allow their clients to lease brand new cars. It is here you’ll be able to experience high-end driving vehicles that come with multiple safety and ergonomic features.
- No selling of vehicle – After the “close-end” term of the lease expires, you can simply return the vehicle you leased. Alternatively, you can also start a new lease term, but for another vehicle. Despite doing this, you will never have to deal with the problem of selling a car so that you can get a decent trade-in value. You still have the option to purchase a car at the end of the lease for a pre-set value.
Benefits Of Buying A Car
- Cost-efficient in the long term – Generally, lease payments done annually are less costly than those monthly payments for car loans. However, you have to remember that each of those loan payments will enable you to establish equity that you can use whenever you want to sell or trade a vehicle. Buying a car and using it for many years after you paid is still the most cost-friendly means to own a vehicle.
- You are free to sell it – Unlike leased vehicles, purchased cars can be sold freely. As a car owner, you have all the rights in the world to sell or trade your unit (you just have to pay the current loan balance). You will never be restricted by a fixed ownership policy that comes with lease terms.
- No restrictions in mileage – Another beneficial perk of buying a car is the freedom from mileage limits. You can drive the car you bought wherever and whenever you want. There’s nothing to worry about mileage since you are the one who owns it. Nobody will charge you if you have gained excessive mileage. Commonly, the fee for exceeding the mileage in lease policies is quite hefty.
- No limitations in customizations – It is quite understandable that some people want to change or improve the appearance of their vehicles. Maybe they have seen better tires or body paints. Of course, if you are in a lease contract, you can never do these customizations. You will have to stick with the default appearance of your vehicle. But once you buy a car, these restrictions are no longer your worries. You can put the accessories you want without paying any fees.
- Depreciation discount – Depending on the value of a car, 20% to 40% of its initial depreciation happens during the first years after it was purchased. Therefore, when you get a two to a three-year-old car, the price you are going to pay will reflect its depreciation value. That would help you save a substantial amount of money.