Are you struggling with the decision of whether to lease or buy a new car? Unfortunately, there’s no right or wrong answer to this question for everyone. For the most part, it comes down to a personal decision based on your financial standing and preferences about the vehicle you drive. While one person may be more concerned with paying off a vehicle as quickly as possible, another may want the flexibility to drive a new car every year. Consider the following pros and cons for each situation to help determine the right choice for you.
Money, Money, Money
While you can usually get a higher priced car for a lower monthly payment by leasing, you may end up with a large balloon payment in the end if you plan on paying the car off at the end of your lease term. On the other hand, if you plan to purchase a car, the best option may be to buy a less expensive car and put down a little extra each month on your loan payments. Doing so will get you out of the loan faster, minimizing the amount you pay in interest. But don’t forget to factor in the amount you’ll pay for repairs. Leased cars tend to be less expensive for repairs, since most leases run for three to four years – is generally the length of the manufacturer’s warranty.
Mileage Limitations
When you’re purchasing a car, you’ll have limitations on how many miles you can drive before the warranty is voided, although in most cases, this figure is high enough to cover your first year or two of driving. On the other hand, when leasing a vehicle, you may be limited in the total number of miles you can drive before you incur hefty per-mile fees. Once you meet your limit, you typically have two options – you can pay for more miles or let them accumulate until the end of the lease and pay the balance off then.
Think About Wear and Tear
When you purchase a car outright, you generally have to live with a certain amount wear and tear. You can choose to fix the minor dings or write them off as part of the cost of owning a car. However, when it comes to leasing a vehicle, you’ll be responsible for every minor scrape and ding. At the end of the lease, the car will be inspected and a figure will be given for the amount you need to pay for repairs. This can be very expensive, but unlike buying a car, you can always turn around and get a new lease for a dent-free car without the hassle of going into the body shop yourself.
As you can see both situations have both positive and negative aspects. With a lease, you’ll pay more over the long run, while with buying, you end up with a car that quickly becomes outdated. The best course of action for you comes down to what your priorities are. Would you rather count your pennies and invest in a vehicle that you’ll eventually own, or do you want the flexibility of a three or four year lease – and the new, dent-free car that comes with it?
