Is your old vehicle paid off? Is it time to think about getting a new one? You have been searching online trying to figure out whether to buy a new car vs leasing but just can’t make up your mind. There are pros and cons associated with either choice and can be a difficult endeavor. When it comes down to making the decision between leasing or buying your next vehicle, it depends on what works best for you. Determining your budget, lifestyle and transportation needs is going to help you decide which is best for you. Let’s take a look at what some of the professionals say about it.
How Leasing Works
When you lease a vehicle, you are not actually buying the whole car. You are only paying for a portion of the car, which includes depreciation, fees, and interest that happens over the lease term. Your average duration is 2 to 4 years and requires a down payment upfront when signing the lease contract. Then you pay a monthly payment over the time that you are in the lease until the term is over. At the end of this time of leasing, you will then have the option to return the car to the dealer or buy the vehicle for a certain amount of money.
Buying a Car
When you purchase a vehicle, you agree to pay the full price of the car. Do this using cash, financing, trade-in or a combination of these. A typical car purchase includes a down payment, taking out a loan, and a trade-in of your old vehicle. The payments are monthly for up to a maximum of 7 years. While you are paying off the debt, the lender will hold the title of the vehicle for collateral. When the loan is fulfilled, you take ownership of the car and the lender will release the title.
Leasing Pros and Cons
Some people need to have a new vehicle every couple of years because their business or employer requires it. Others use their cars for entertaining customers and like to make sure their clients are comfortable. On the other hand, some just want to drive a new car every few years with all the latest technology. Here are some of the pros of leasing a vehicle:
- Reduced monthly payments
- Small or no down payment
- No agreements or trade-in at the end of the lease
- Drive a nicer car for lower monthly payments
- Always drive a newer car
- Lower sales tax paid
Cons of leasing:
- Mileage is usually limited to 12,000 miles per year; however, you can purchase more.
- Contracts for a lease can be confusing
- When the lease ends you don’t own the vehicle but will have the option to buy
- If you terminate your lease early, the fees are high
- Cannot personalize or modify the car
- You pay more for a lease than buying outright
- You may have to pay hidden fees for mileage or wear and tear
Buying Pros and Cons
If you are planning to keep your car for several years than buying is the way to go. After the loan is paid off the vehicle is yours. You can use it for a trade in, pass it down to your children or keep it and save your money. Here are the pros of buying a vehicle:
- It will have resale or trade-in value
- You can sell it or trade it without hidden fees
- No fees for excess mileage
- You can personalize or modify the car in any way
- When the loan is paid, it’s your car
Buying a new vehicle also has cons that include:
- A sizable down payment is required
- The monthly payments are higher
- There are more selling and trade-in agreements
- The car will depreciate over the years and decrease in value
- You are responsible for all the repairs and maintenance after the warranty expires
New Car vs Leasing
After reading this, it will be easier to decide if buying or leasing is the right decision for you. It depends on how the car is going to be used and how much money you want to invest.
Make sure you check out 10 Best Car Buying Tips for more guidance.