Your Next Vehicle: Lease vs. Buy

Shopping around for your new vehicle can be an exciting thing to do, but when it comes to your final option, you may run across a mind-boggling issue: Lease vs. Buy? There are many things to consider in leasing or buying a vehicle and that can include credit score, mileage, monthly payment, down payment, maintenance, and many more. Like buying a house, many people think it is smart to buy than lease. The same principle may be applied when it comes to vehicles, though it is good to keep your options open and see the benefits of leasing vs. buying.

Lease vs. Buy: When to Consider Buying a Vehicle?

Like your home, a vehicle can be an investment and buying one can definitely add up to your wealth. Other than the flexibility of making improvements on your vehicle, you can have unlimited mileage that can make you sell or trade in the future. Consider a buying option when you:

1. Have the ability to make a down payment
2. Have a good credit score or rating
3. Plan for a higher mileage
4. Plan for better wear and tear features on your vehicle
5. Can truly afford higher payments each month

Lease vs. Buy: When to Consider Leasing a Vehicle?

There are definitely restrictions when you lease a vehicle like mileage limits, inability to trade or upgrade, or keeping the vehicle as good as new. This doesn’t mean you should shut off the leasing option. Leasing can help you get a newer vehicle at an affordable rate and follow this option when you:

1. Don’t have the ability to make a huge down payment
2. Have a poor credit score
3. Want to keep your monthly payments low
4. Want to stay within your mileage limits
5. Can maintain the interior and exterior of your leased vehicle

Lease vs. Buy: What Do You Get When You Buy a Vehicle?

The major benefit of buying a vehicle is that you will get to own it one day. You can sell or trade it without being locked in a fixed ownership period. Your insurance limits are lower and you can upgrade your mileage without restrictions. The most obvious drawback, however, of buying a vehicle is the higher monthly payments and the nasty depreciation of your auto in years to come. On top of these, buying a vehicle provides you:

1. Ownership of your vehicle until the end of your loan or financing term
2. Up-front fees like down payments, taxes, registration charges, and other related costs
3. Higher monthly payments on your auto loan
4. An early termination fee for any amount you may not have paid off
5. A chance to sell or trade your vehicle for a new one
6. The risk of market value depreciation
7. Higher mileage that may affect the value of your vehicle
8. Excess wear and tear that may lower your vehicle’s selling price in the future
9. Zero payment at the end of your loan term

Lease vs. Buy: What Do You Get When You Lease a Vehicle?

When financial resources are running short, leasing a vehicle can help you get a car and maintain it. With lower monthly payments, with or without down payments, many are getting into the leasing caravan. Normally, it is like renting a vehicle for a certain number of months, where you pay only for the use of the auto, without ever suffering its depreciation cost. On top of these, leasing a vehicle provides you:

1. Temporary ownership of your vehicle, where you need to return it to your dealer at the end of the lease term ( unless you opt to buy it )
2. Up-front fees like a security deposit, taxes, registration charges, and other related costs
3. Lower monthly payments than those you pay when you buy a vehicle
4. An early termination fee if you return the vehicle before your lease term expires
5. End-of-lease expenses that you pay when you return the vehicle
6. The risk of future market value on your leased vehicle
7. A limited number of mileage each year, or you pay penalties for exceeding it
8. Extra costs of having the vehicle repaired for exceeding the wear and tear limits
9. Payment at the end of your lease term if you decide to buy the vehicle or lease another

Overall, don’t let pushy car dealers give you a hefty price tag, whether you are buying or leasing a vehicle. When it comes to the topic of Lease vs. Buy, you must learn to negotiate a fair deal that is
just right for you. You don’t have to rush in making a decision now that you might regret later. Know that to lease or buy a vehicle will always depend on your personal and financial circumstances. By knowing the pros and cons of leasing or buying a vehicle, you can make a more sound judgment on which option to finally take. Compare the Costs Well!

RESOURCES:

Pareto, Cathy. “ Pros and Cons of Leasing vs Buying a Vehicle. “ 2009. Investopedia, ULC.
http://www.investopedia.com/articles/pf/05/042105.asp

Reed, Philip. “ Compare the Costs: Buying vs. Leasing vs. Buying a Used Car. “ Edmunds, Inc.
1995 – 2009. http://www.edmunds.com/advice/buying/articles/47079/article.html

DMV. “ Lease or Buy? “ 1999 – 2009.
http://www.dmv.org/how-to-guides/buy-or-lease.php

Pritchard, Justin. “ Lease vs Buy Your Next Vehicle. “ 2009. About.com.
http://banking.about.com/od/loans/a/leasevsbuy.htm

Lending Tree, LLC. “ New Car: Lease vs. Buy. “ August 2007.
http://www.lendingtree.com/auto-loans/advice/buying-a-new-car/lease-vs-buy-a-new-car/