There’s more than the make and model to consider when it’s time to buy a new car. For consumers who’ll be financing the purchase, there are generally two options, leasing, and buying. A lot of people find leasing confusing because of all the clauses and limits of liability, hidden charges and sometimes terminology that isn’t easy to understand.
Most of us will purchase between 6-10 cars over our lifetime, but for those who lease, rather than buy, they’ll have the use of upwards of 60 cars during t same time period. Notice the word, “use” in that sentence. It’s appropriate because when leasing a vehicle you never actually own it, you’re only paying to use it.
Things To Consider Before Deciding To Lease
Before even considering the pros and cons, consumers should be asking themselves about their particular needs, wants and circumstances to see which option, both short and long term, will be best for them.
Things to consider are: Will the vehicle be used in a work capacity, such as taking clients to meetings or escorting them to functions? Do you have a need to impress either your employer or clients? Do you appreciate luxury cars that make heads turn? Do you want to be able to drive a new car every couple of years?
Do you have four kids under the age of seven? Are you part of the daycare carpool program? All those questions should be asked before deciding the best route to go. If you’re wondering how they’re relevant, let’s take a deeper look at how the answers could point you in the right direction between leasing and buying.
Maybe you’re a real estate agent who drives perspective homebuyers to your listings, or maybe you have a boss that frequently asks you to drive to meetings or scheduled appearances and appointments. Whatever the reason, maybe you have a need, or simply a want, to be able to drive a luxury car without having to have huge monthly payments. Leasing can be the best option when wanting more bang, flash, and bling.
Now, let’s say you’re a busy mom with a set of twins and a two kids who are still in diapers. Maybe you also have a couple of dogs and a husband who eats breakfast in the car on the way to work. If any of these situations sound similar to your life, then leasing is probably not the best option since there are extensive penalties for any damage above what the makers consider normal wear and tear. Dogs, kids, and messy husbands are sure to leave behind considerably more than normal wear and tear.
Pros And Cons Of Choosing To Lease Your Next Vehicle
So, leasing sounds like something that fits your lifestyle and budget, but before signing on the dotted line, take a look at some of the pros and cons when deciding to lease.
- Able to drive a new car every 2-3 years.
- Payments are almost always lower than buying.
- Repair costs are much lower since the vehicle will be under manufacturer’s warranty for the entire duration of the lease.
- Ability to drive luxury and high-performance vehicles
- You’ll never actually own the vehicle, you are only paying for use
- Limited mileage. (penalties for going over)
- May be charged for damage beyond normal wear and tear
- Cannot customize or change anything. Must return the car in original condition.
- Hefty penalties for early termination.
- At end of lease, must either purchase or lease another vehicle.
- Finance charges may be higher on leases than for traditional loans.
What Is The Better Deal – Leasing Or Buying?
All other reasons aside, if consumers want the best value, they should be financing a new vehicle via a traditional loan. They might have to come up with more money down and their monthly payments will be higher than with leasing, but at the end of the loan period, they’ll own the vehicle, which even after depreciation, will give them equity and real value.
Consumers with traditional loans should always try to keep the vehicle for the duration of the loan and for as long thereafter as the vehicle is roadworthy.
The bottom line is leasing, depending on your needs and motivation, can be a cheaper month-to-month way to drive a more expensive make or model, but at the end of the lease, you’ll have nothing to show for those lower payments.
Whichever method is chosen, consumers should always have the dealership explain the loan or lease details in a language they can understand. Never sign on the dotted line, until you understand the entire terms of the contract!
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