New Cars: Buying vs. Leasing

by admin

Buying vs. leasing. It’s the ultimate question that all drivers ask themselves at one point or another and the fact is that both scenarios have their benefits and drawbacks. So to help you decide what’s right for you, we’ll break down the advantages and costs of each.
How it works: Like renting an apartment, leasing a car means that you do not own the car. Leases typically last three years or less, and at the end of the lease, you can return the car to the dealership, renew the lease, or try to purchase the car at the end of the lease (which is much more expensive than buying the car in the first place).
The benefits: When the lease is up, you’re no longer obligated to the car or the payment and can start anew with a brand new car if you like. Leasing is also a great option if you don’t have a lot of money for a down payment.
The drawbacks: The biggest disadvantage of leasing is that your payments are not an investment toward something that will eventually be yours. Instead, your monthly payments are a fee you pay for borrowing the car. Additionally, leases limit the amount of miles you can drive on the vehicle, and if you go over the limit, you have to pay a pretty hefty fee.
How it works: Simply put, you either pay in full for the car or take out a loan to buy the car. Once you finish paying off the loan, the title of the vehicle is mailed to you and the car is yours.
The benefits: Once the loan is paid off, you no longer have to make monthly payments—it’s your car. Additionally, you don’t have to worry about mile limitations. A great benefit to making a car payment is that when you make your loan payments on time, your credit score improves.
The drawbacks: Payments are typically higher when you purchase a vehicle, but those payments are an investment toward something that you will eventually own. Additionally, owning a car usually requires a substantial down payment if you’re taking out a loan. When the warranty is up, you’re financially responsible for repair costs, even if you’re still making loan payments.
Generally speaking, buying a car is the most financially wise option for most drivers, but isn’t always feasible if you can’t make a down payment. If you like having a new car every couple years or can’t afford a down payment, then leasing is probably your best bet.


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