Personal preference and lifestyle both play an important role when deciding to own a car. You can either buy one outright or lease it; both are viable options and, while neither is clearly “better” over the other, they do have their respective advantages and disadvantages.
We’ll be looking at the differences and implications of leasing vs buying a car in hopes of enlightening you as to what option is better suited for your particular needs.
Choosing to either buy or lease wholly depends on your current goals, needs, and of course, finances. Because both options involve expending money, it should be clear that getting a car should be out of necessity rather than a luxury.
While both options do have their pluses, the more important thing to remember is which one is more advantageous given your current status. For example, it might be wiser to get a car on the lease if you don’t have the required capital while buying wins out in times of recession due to the fact that sellers are looking to quickly liquidate assets.
First off, to set the record straight, leasing a car does not make you own it. With that being said, leasing does still have its perks. Let’s go over them now.
When it comes to the overall cost, leasing a car is significantly less than buying one. Leasing requires little or no down payment and avoids extra charges such as those from upfront sales tax. The only additional payments you’re likely to make are either due to excess mileage over the agreed limit, damage, and early lease termination.
You lease a car for a set amount of time (usually 1 to 4 years), monthly payments of which are based on the depreciation value expected during the leasing period. Such a system prevents the common dilemma of paying for more than a car’s actual worth since varying car models have varying depreciation values.
Leased vehicles that are still covered by manufacturer warranty dodge a bullet when hit with a sudden and major repair bill. The only out-of-pocket expense on your part would be regular maintenance and tune-up, as well as the minimum auto insurance required by your state.
Easily drive and replace the latest car models by getting them through a lease. Ride in style and nab some extra savings to boot.
Once your lease contract expires, you can simply return the vehicle or initiate a new lease for a different one. Sometimes, a lessor even allows you to lease a balance that lets you own the car, which can be beneficial as it is often equal or even less than the actual market value. Unlike when you buy a car, leasing doesn’t put you through the hassle of having to sell your vehicle in hopes of breaking even.
While lessors are generally less stringent than lenders (loan agencies), avoiding credit checks and ridiculous interest rates, they also have the liberty of easily reclaiming your car should you consistently miss on making payments and/or violate any of the lease agreements.
The number 1 benefit is of course owning a car, which you can then drive for the next several years, racking up depreciation and all-in-all costing less with time. Purchasing a car through a loan also allows you to build up its future equity value so as to be able to still sell it for a fair price one day.
As the owner, and for whatever reason, you have full control when to trade and/or sell your car, unlike with a lease which requires meeting a fixed time period and doesn't guarantee ownership.
Owning a car also does away with any mileage limits and associated surcharges. If the car is yours, then you can drive it as often or as little and as short or as far as you want.
Leasing a car rarely allows you to tamper with its appearance, whether internal or external. Buying a car lets you treat it as a personal canvas, outfitting it with all kinds of trinkets and add-ons as you see fit.
Depending on the model, a car’s value depreciates 20% - 40% within the first few years. Buying a car that’s 2 or 3 years old takes advantage of this depreciation.