Buy Or Lease Car

Desperately want a car and don’t know each way to go? Lease or buy? Wondering which one is better? The answer is: no definite one. It depends on lots of variables and customer preferences.

Know that leasing and purchasing are two different methods of acquiring a car. One method enables the use of a car, and the other the purchase of a car. Each has its own advantages and disadvantages.

When thinking of getting a car through one of these two methods you need to think about more than money. You have to answer yourself questions like: ownership or low up front costs? Pay cash or head for a bigger debt but displaced in small monthly fees dispersed on a considerable amount of time? So you see that making this decision isn’t that easy. There are a set of factors that need to be taken into the equation.

First of all you need to know that buying and leasing are very different.

When you buy a car you pay the entire car price once. The number of miles that you drive with it is no longer relevant. When it comes to direct purchase you as a buyer have two options: either you have enough money to pay directly or head for a loan that will imply the fact that you will pay a monthly interest established by you and the loan company. Later on you may sell the vehicle for a depreciated resale value (as used car.)

Leasing is different thing. When you enter a leasing contract, you pay only some of the car’s price. That part is the one you “use up” when driving it. You must know that leasing and renting are, again, different things. You may choose not to make a down payment, you only pay the sales tax on the monthly fee, and a little extra called the money factor which is similar to the interest in a loan. You may require to pay for some fees and a possible security deposit that you don’t have to do when you get the car. The first monthly fee is paid when you sign the contract and it’s for the month ahead.

You may think that in both loan and lease cases you still pay a monthly fee so you ask yourself “how are they different?”. Well they are since lease fees are made of two components: a depreciation charge and a finance charge.  Depreciation is the part of the monthly fee that covers the company from which you leased the car, namely the part that covers the vehicle’s value depreciation during your usage.

So still which is better?  Lease or buy? Let’s simplify. Take the things that are more important to you. Since all of us live our lives differently and have different priorities than we may go for various choices. That’s why a definite answer cannot be given since one person’s choice can be completely wrong for another.

People that consider leasing are the ones that enjoy driving a new car for a limited period of time, let’s say a couple of years (3 – 4) don’t desire high monthly fees, like having a reliable car that it’s equipped with top safety features and that is ensured at all times, don’t like snooping around through old or used cars, have a constant monthly income that satisfies every need, don’t drive more than the usual, properly do maintenance and are willing to extend these payments to have all these features.

Post tags: Tags: Buy or lease car, ownership or low up front, purchasing a car