To Buy A Car Or To Lease

If you are in the market for a new car, you have a few options, you can buy or you can lease. There are pros and cons to each option, it’s up to you to carefully weigh the pros and cons for each option and decide if it’s better for you to buy a car or to lease a car.

Car

The difference between buying and leasing is that when you buy a car you pay the whole price of the car and when you are done paying it off, usually in a time frame between two to five years, you own it.

With a lease you are only paying for the time you use the car and at the end of the lease you will turn the car back in, you don’t actually own it. The actual resale amount of the car, what it is projected to be worth and can be sold for at the end of the lease, will be the major factor to what you pay for the car.

For example, if you lease a car that is valued at $30,000 and you lease it for 3 years, the dealer will determine how much it can be sold for at the end of the lease period.

So if that $30,000 car can be sold used after the lease period for $20,000 than basically you would only have to pay $10,000 for the use of that car during the time you are leasing it. That amount will be divided into monthly payments.

That is just one of the main differences that needs to be considered when choosing if you want to To buy a car or to lease.

So, you can probably get a nicer car for the same monthly payment if you lease rather than buy.

As I’m sure you have already figured out there are some obvious drawbacks to leasing:

1. First you don’t own the car after the lease period. You will have to buy or lease another car.

2. There are strict mileage limits when you lease and if you go over those you will have to pay an additional fee. Usually you are allowed around 15,000 miles each year. Going over will cost you big so make sure you know what the mileage limits are as well as whether or not you can stay within those limits.

3. You won’t be charged for “normal” wear and tear but you will be charged extra for any damage. Make sure you are aware of what constitutes normal and what is considered damage.

4. Check to make sure but in most cases you will still be responsible for keeping insurance on your car even though it is a lease. Since a lease often makes it possible to get more car for the money than buying would, it may also mean higher insurance payments on that more expensive car. Take that into consideration.

It is really up to you whether to buy a car or to lease a car. If you don’t put a lot of miles on your car, you like to trade up every few years, you want a nicer car than you could afford to actually buy and you don’t care if you don’t actually own the car, leasing may be for you. If not, stick with purchasing a car.

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Categories: Budget Management