How do you know if Leasing is Right for You?

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When it's time for a new ride, you have a few important decisions to make. Do you want a brand new car or a used one? Is a car, truck, or SUV the right choice? What features do you need? Along with these questions, you also need to determine if you want to buy or lease. Let's explore the difference between buying and leasing and what factors you need to consider when choosing between the two.

The Difference Between Buying and Leasing

Image via Unsplash by Jessica Furtney

When you buy a car, you usually pay an initial down payment and then get an auto loan for the rest of the money you owe. Of course, you can pay for a car in full to avoid monthly auto loan payments. When you have an auto loan, you are paying a portion of what you owe along with any interest you incur. When you have paid off the loan in full, the car is officially your property.

Leasing a car is essentially renting a car for a set period of time. Most leases range from 24 to 60 months in length. Similar to how you'd pay rent for an apartment, you pay a monthly leasing bill while the vehicle is in your possession. Once the lease ends, you need to return it to the dealership, or you can buy it. Car leases also come with a mileage limit, meaning you may need to pay a fee if you exceed the number of miles you're allowed to put on the car. 

Both buying and leasing offer benefits and some drawbacks. Prior to making a decision, it's important to decide if buying or leasing is the right for your financial situation and lifestyle. You need to consider the cost, convenience, warranty coverage, flexibility, and technology associated with each option since these factors can differ. 

The Pros of Buying a Vehicle

Many people like buying over leasing because they get to actually own the vehicle. They see buying a car as an investment since they can get some of their money back when it's time to sell. When you own a car, you can decide when to buy, sell, or trade it for something new. With a lease, you need to keep your car until the end of your contract. If you turn in a leased vehicle early, you often need to pay the remainder of lease payments in full.

If you like to customize vehicles, you may want to buy since leases restrict you from making any sort of upgrades. When you own a car, you can make any sort of customization you want to make it truly yours. 

Car owners can also put as many miles as they want on their vehicles. If you want to drive across the country on a whim, you don't need to worry about budgeting your miles. Although it will cause quicker wear and tear, you can drive wherever you like.

The Cons of Buying a Vehicle

If you're the type of person who wants the latest and greatest vehicles, buying a car might not be the best choice for you. For instance, if you purchase a brand new vehicle and a better one comes out the next year, it's likely that you still need to pay off your current vehicle long before you can upgrade. 

Even if buying a vehicle can be an investment, in most cases, it will significantly depreciate in value. As soon as you drive a brand-new vehicle off of the lot, it starts to depreciate. The longer you keep the vehicle, the lower its resale value is. 

People who buy cars tend to keep them longer than those who lease. Once your warranty is up, you're responsible for all repairs. If you decide to buy an older vehicle, you'll likely need to bring it in for more costly repairs, which can add up quickly. 

The Pros of Leasing a Vehicle

Leasing a vehicle is ideal for people who want new car technology. Manufacturers continually advance their car tech to improve navigation and driver-assist features for your comfort and convenience. For a few years, you can enjoy the best cars on the market, then upgrade for a newer model once your lease is up. Even if you don't want to upgrade, you can simply return the car and avoid the hassle of trying to sell it.

Another benefit is that many leasing plans have free servicing for a limited amount of time. When you need to visit the service center for routine maintenance, the technicians can ensure your vehicle is running its best on the dealership's dime. Even if your leased vehicle doesn't come with a service plan, new cars tend to be much more affordable to maintain since they have fewer problems from wear and tear. 

Leases usually offer low monthly car payments compared to auto loans. Since you're driving a new vehicle, it's unlikely that you need to pay for sudden repairs.

The Cons of Leasing a Vehicle

One drawback of a lease is that you need to take extra-special care of your vehicle. You'll need to pay for significant damage to the vehicle, such as major dents, scratches, or interior damage. 

Another con is that you need to limit the number of miles you drive since leases have mileage caps. If you typically just drive to work and run errands, it's easy to stay within your allotted miles. If you plan to go on cross-country trips or have a long work commute, then buying a car is the better option. 

When owning a car, you get some kind of equity. By the end of your lease, you have no ownership over the vehicle. All of your money is going toward renting the vehicle rather than paying off a loan.

When deciding to lease or buy, you need to assess your lifestyle and financial situation. When you're ready for a new ride, check out our assortment of vehicles that you can buy or lease. Contact us if you have any additional questions about this important decision.