When you decide to get a new vehicle, you’re left with a decision to buy or lease it. Most of us know that buying a car gives you ownership; you may have to take out an auto loan and make monthly payments, but you’re working toward paying the car off. Leasing, however, is kind of like renting; you make payments towards the car’s depreciation and you may have the option to purchase the vehicle at the end of the leasing period.
There are pros and cons to each option, but really, the choice is what you prefer. To break it down easily for you, we will layout certain preferences so you’ll be able to make the best decision for you.
You prefer a low monthly payment
Leasing will usually give you a lower monthly payment than buying. Typically, you’ll even pay less when leasing a luxury vehicle. You will also have the factory warranty, which will cover most repairs. So if you fear that you’ll be driving your new car off the lot and straight into the repair shop, leasing can eliminate that concern.
You prefer to own your vehicle
This is pretty obvious, but if you are the type of person who wants to have ownership, buying is the way to go. When you own a vehicle, you can customize and drive it as many miles as you’d like, opposed to leasing where you can only drive it a set number of miles before you are assessed excess mileage fees.
You prefer to have a new vehicle often
An attractive feature of leasing is the ability to drive a new car every few years. An important factor to consider when leasing is making sure you have a stable source of income. Since you’ll constantly be making payments during the life of your lease, an unexpected loss in finances could put you in a hole with the contract you signed (which can already be difficult to get out of).
You prefer to build value and trade/sell your vehicle
With leasing, you don’t have to worry about selling your car, but when you buy a car you can trade/sell at any time. So that new Ford Mustang you bought in 1994 that now has 18 inch rims, a custom spoiler and a brand new interior design could be sold for a decent price (as long as it still starts). J
Whichever option you prefer, it’s worth noting that buying a car may be more beneficial in the long run. Leasing is cheaper in the short term and you need to be sure your income is consistent or predictable. If you still are in-between, take a look at our BALANCE page on Buying Vs. Leasing.
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