Shopping for a new vehicle? If you’re deciding on whether to buy or lease your next vehicle you should weigh both options. Below are some items to consider.
Leasing vs Buying a New Car
I’m sure you’ve seen the enticing commercials promoting low lease payments. When you lease a vehicle, your payments are typically lower than a loan because your payments are based on the depreciation period that you’re getting the car for rather than the total purchase price. While the monthly payment is lower, it usually results in continuous monthly payments, because consumers usually trade their vehicles in for a new car every 2 or 3 years. Compare that to the person who bought their car and only has to pay for the length of the loan.
As cars get older the maintenance on them usually rises. Once your car is paid off, you can put money aside to help cover maintenance and repairs. Typically, people lease their cars for 2 or 3 years, so the wear and tear are minimal in comparison.
When you lease your car, you have a specific mileage limit each year. For those that don’t drive often, this may not be of importance. For those that have long commutes or travel often, this should be a consideration because there is an excess mile charge for each mile you go over; be sure to read the fine print on your lease terms.
If you’re someone that likes to have the newest bells and whistles in your car, leasing may be for you. When you lease your car, you have the ease of trading it in for a new vehicle (and a new lease). This is great for those drivers that don’t like the idea of keeping one vehicle for a long period of time. However, keep in mind that if you break your lease early, you may have to pay penalties.
Auto insurance is a cost that all drivers incur; however, when you lease a car you may have to get gap insurance on top of the auto insurance. Also, insurance standards vary depending on the leasing company; so, if your current auto insurance doesn’t meet their standards, you may have to adjust it.
As with any financial decision, weigh the pros and cons of leasing vs buying your next automobile. Do your homework and compare rates and payments. Your preferences and budget will ultimately help determine which decision is best for you.
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