If you are in the market for a new car, you have a plethora of financing options out there! Whether you are looking to update your old ride or find a vehicle with better gas mileage, it’s worth your while to consider both leasing and buying to determine which is the best option for you. Here is an understanding of each and a list of their benefits:
Leasing – When you lease a vehicle, you are paying for only a portion of the car’s actual cost (depreciation, fees, and interest)
- No sales involved – You won’t have to stress over trade-in values because you only pay for the lease of the vehicle. Think of it like you are renting the car.
- Lower or possible no down payment – Typically the down payment on a leased vehicle is 20% of the car’s value. However, like most parts of a lease, can be negotiated.
- Lower monthly payments – Since you are only paying for the depreciation of the car during the time you are driving it on a lease versus the total value if you purchase it outright, the monthly payments are typically lower. If you are on a strict monthly budget, the lower monthly payment on a lease may be your best bet.
- Warranty coverage - Vehicle repairs are normally covered by warranty under the lease agreement. The lease of a new car usually runs three years, so manufactures warranty should cover most repairs. Make sure you negotiate this into your deal.
- Business Tax benefit – Business owners can deduct the business use percentage of the cost of a leased car. Be sure to check the tax codes in your state.
- Flexibility – If you like having the newest and most current technology, leasing gives you the flexibility to change vehicles every few years, upgrading to the newest models on the market.
Buying – When you purchase an automobile, it is all yours once you pay it off.
- Ownership – When buying a vehicle, once the final payment is made, it is yours to keep, trade or re-sell. If you are a person who keeps a car forever, buying a car is the way to go for you.
- Insurance coverage – You are able to decide exactly how much and what type of insurance you want for your vehicle. With a leased vehicle, this decision is made for you and most of the time, the insurance is more than what you would choose for yourself.
- Customization – You can upgrade or modify any aspect of your vehicle.
- No mileage limits – With car ownership, you can drive as far as your imagination takes you without fear of over-mileage fees.
- Value - With ownership, your car is considered one of your assets.
There is no “one size fits all” when it comes to car ownership. As with any big financial decision, it’s best to do your homework and be as prepared as you can be before making final decisions. Before walking onto the car lot, gather the information you need based on your particular circumstances. This can possibly help make the decision to buy or lease a simple one for you after all.