So you’re Looking for a New Car… Should You Buy or Lease?
Has your car just broken down? Maybe you’re looking for something different? In any case, you’re in the market for a car. But should you buy a vehicle or maybe lease it instead? Of course there are pros and cons to both these options and we’re here to talk about them.
Leasing your car vs. Buying your car
Leasing is cheaper upfront. Down payments are usually cheaper than buying a car outright, and monthly payments will also be cheaper. You also don’t have to worry about long term maintenance for your car if you lease because when the lease is up, you can lease a different car altogether.
Buying a car has a higher upfront cost, a more expensive down payment, and larger monthly installments. However, this comes with the advantage of keeping the car after you’ve finished paying for it. You’re free to do with the car whatever you wish when you buy it. Furthermore, if you’re able to pay for the entire car outright, the cost will be cheaper than if you finance.
What to consider when you choose?
When you’re considering whether to buy or lease, you need to take into account first your monthly cashflow. Will your budget allow you to keep up with the monthly payments for the financing of the car you bought? If you don’t think it can, consider leasing. The same consideration also applies when calculating whether or not you can even afford to shell out the money for the initial downpayment as well. Remember that leasing downpayment is the cheaper choice in this case.
Consider how much you’ll be driving your car. Leasing contracts can have a distance traveled maximum clause meaning that you might get charged additional fees for traveling more than the distance stipulated by your contract. Usually, these distances are based on the average distance traveled across the number of years termed in the contract.
Next, is how rough your driving is. If you’re going to take your car out into the country often, maybe leasing isn’t for you. Wear and tear penalties exist for these types of drivers so, if you rough up your car often, you’ll end up paying a lot more.
Will you be using your car for business? If so, check your tax code. You may be able to deduct a leased car’s financing from your taxes. In contrast, you cannot deduct your payments for a car you bought.
Lastly is a question of your commitment, will you be able to keep the car for the entirety of the lease? Because if you can’t, there will be extra fees for cancellation that may add up to multiple months of payments.
The Bottom Line
In the end buying a car is always cheaper than leasing it in the long run. Buying a car also gives you the option of selling it or donating it in the future once you’ve paid it off as well. However, if you’re the type of person who likes having something new every few years, it may be a good idea to consider leasing a vehicle instead, but remember that you’ll be paying a bit more than just buying the car, just in smaller installments.