It’s a key question faced by every person looking to get a new car: should they buy, or should they lease? While someone who buys a car will own the vehicle outright at some point, a person leasing a car is paying to drive the car for a set period, generally three to four years. After an initial fee up front, the lease requires monthly payments until it is completed and the car is returned. Those buying a car can pay the full price up front or, as is more common, discharge the cost with monthly payments over a longer time frame.
Both options have some serious advantages going for them. Here are the benefits of each.
The monthly payments owed by car lessees are generally much lower than those owed by anyone buying a car. This is one of the most significant advantages of leasing a car.
One of the big advantages of buying a car is just that — it is actually owned. Car owners can do whatever they want with their vehicle, while lessees are not allowed to make modifications. Car owners can trade their vehicle in or sell it anytime they want, or keep it for a longer time if it still suits their needs.
The initial payment required to drive a car off the lot is generally significantly higher when buying a car.
Probably the biggest advantage of buying a car is that, in the long run, doing so is highly likely to save money. While car buyers may be required to make higher monthly payments, each such payment increases the equity they hold in their cars. Eventually, the car will be owned entirely. The longer a car is driven after this point, the more money is saved.
Someone who always leases their cars will never be driving a car that is older than three or four years. They will always have access to the newest models, complete with the latest features and advances in safety, reliability, and performance. It is also often possible to afford a more expensive car than would otherwise be possible.
Leasing a car generally means the driver can only drive a certain number of miles. Going over this limit results in extra fees. While this restriction may not be a problem for some, it is not even potentially an issue for car buyers.
While car lessees are responsible for upkeep and maintenance, they generally have a manufacturer warranty that will cover large expenses. This can also make for easier monthly budgeting, as no unexpected, costly repair bills will ever be incurred.
Those who lease their cars must keep the car in a certain minimum condition to avoid paying fees. Car buyers will never have to worry about these fees.
Both leasing and buying a car have their own set of advantages. Leasing can be a solid idea for those who might otherwise take out a long loan of six or more years, which can sometimes result in a car buyer being ‘upside down’ on their loan, meaning that they owe more than the car is actually worth. Leasing is also a good idea for people who really want a new car every few years. For most other folks, however, the higher ultimate cost of leasing a vehicle means buying a car is the smarter option. Just make sure you get the best option for you to reach your financial goals.