When picking out a new car, many consumers will consider which has the best gas mileage, is least expensive to insure or has the most positive safety record. However, the most important decision might be whether to buy or lease the new vehicle. There is no right or wrong answer, because each buyer has to consider their own situation.
Why you should buy
For many years, most of those shopping for a new car only considered buying it by financing. That is still the best option for many consumers.
*Equity – Buying a car allows the driver to build equity and own the vehicle outright after the loan has been paid off. This allows the owner to have something of value that they can control. A leased car has to be turned back in after two or three years.
*No cycle – After the car is paid off, typically in about five years, the owner can keep it for as long as they want, provided it continues to run. As mentioned above, a leased vehicle has to be returned to the dealer at the end of the agreement, meaning the consumer will have to start the shopping process over again.
*Less worry – When buying a car drivers don’t have to worry about how much they drive it or if they might be moving in the near future. There are no restrictions and if they move, they can take it with them. When leased, vehicles have a mileage limit applied that can result in hefty penalties if exceeded. Moving long distance can be difficult since the car has to be returned to the dealer at the end of the deal. More fees will apply if the deal has to be broken early.
*Comfort – Drivers who own their vehicle won’t have to get used to a new, different car every two or three years.
Why you should lease
Leasing a vehicle makes sense for a lot of people, especially in this day and age when technological advancements come so fast.
*Lower prices – Leasing a vehicle often results in lower monthly payments, especially when auto loan interest rates are high. This can sometimes allow someone to drive a car that would normally be out of their price range if buying.
*Maintenance – Many of the repair costs will be borne by the dealership since the vehicle will likely be on warranty throughout the agreement.
*Test drive – A consumer that is undecided about what vehicle they might want can use a lease as an opportunity to decide if they really like it or not. If they do, they can buy one at the end of the lease. If not, they can move on to another in three years.
Buying a car is a big decision to make. The vehicle will be owned for several years, so the buyer should be sure they are picking the right one. If there is any indecision on the part of the buyer, leasing might be the better option.
Melanie Lewis writes for a site that has more information about automobile financing, including tips on leasing a vehicle.