Fortunately, there are advantages to both buying and leasing automobiles. It all depends upon what is more important to the driver and where his or her values lie. Here are some points that should be taken into consideration.
Advantages Of Leasing
1. Financing And Payments
First of all, it is easier to obtain a lease than a loan. You do not need spotless credit and the down payment is either minimal, or not required at all.
Your monthly payments are much lower when leasing vehicles rather than buying them outright. This is because you are only paying for future depreciation, taxes, fees and rent charges. On the other hand, when you buy an auto, your monthly payments are markedly higher since you are paying the total purchase price, plus finance charges, interest, taxes, and fees.
Since the payments are substantially lower when leasing, lessees also can afford to drive higher-class cars that may not be within their budget to purchase.
2. Turning In The Vehicle
The best part of leasing is the ability to turn your vehicle in every few years and walk away scot-free. After you pay the end-of-lease costs, you do not have to worry about the vehicle’s depreciation, or how it will affect you financially.
Plus, you get to choose your next vehicle among the new cars for that model year. You can drive a state-of-the-art model every three years.
3. Maintenance Costs
Because most leases are for a period of three years, and the majority of warranties on new cars also last for three years, nearly all maintenance costs are covered.
Advantages of Buying
1. Owning The Vehicle
When you purchase an automobile, it is yours and you get to keep it as long as you desire. You can also sell or trade-in the vehicle if you wish. While it is true that vehicle will depreciate, it should retain the majority of its value, and you can use the cash in any way you see fit. You can even use the money to pay off the balance of the original loan.
You also have the freedom to modify or customize your auto any way you want to. Conversely, when you lease a vehicle, it must be returned in good enough condition to be sold, so all custom parts must be removed before the automobile is returned to the dealer.
2. Unlimited Miles
When you own your automobile, you can drive as many miles as you want without any time restrictions. They only worry you would have is keeping the mileage to a minimum to retain trade-in and resale value.
However, many leases only allow lessees to drive twelve thousand to fifteen thousand miles per year to ensure that the vehicle can be sold later on. Most of the time, they are charged exorbitant fees for exceeding mileage limits. These fees can run the gambit from five cents to twenty cents per extra mile.
These charges may not seem like much, but over a three-year period, they add up quickly. For example, if you drive a mere five thousand miles per year over the annual limit, that would be another $3000 owed at the end of a three-year lease!
3. No Worries About Wear and Tear
If you own a vehicle, you don’t have to concern yourself with damages or wear and tear unless you choose to. Though it can lower resale or trade-in value, that is a bridge you can cross when you come to it.
Lessees must constantly worry about every ding and dent, because they are responsible for the cost of getting the vehicle fixed. They are also expected to pay extra charges for any damage that exceeds what the dealer considers as normal wear and tear.
4. Building Equity
Buying new cars builds equity, while leasing vehicles does not. In three to five years, once your loan is paid-off, you can put that equity towards the purchase of your next automobile. However, if you are leasing, you must buy or lease another vehicle at the end of three years, without any cash or equity to aid in the process.
Choosing What Is Best For You
When you take into account all the different variables that must be considered, the ‘leasing versus buying’ question is not necessarily all about affordability. It is a decision based entirely on your lifestyle and your unique personality. It is best to take the time to seriously weigh which option is best for you before making a multi-year commitment.