Nothing is more stressful than searching for a new car when your old ride has begun to fail. Not only is it a royal pain to car hunt, but then you need to figure out financing. The question always comes up as to whether it is better to buy a new car or lease it? Navigating this process can be a bit overwhelming, so here are our thoughts on leasing and buying.
Before you sign on the dotted line here are three things you should consider: what are your goals? Do you want to eventually own your car or want to switch it up in a few years? Secondly, what is your budget? And finally, what is your lifestyle/personal preference?
Both buying and leasing have their benefits and drawbacks. The key is to determine which of the benefits will impact you. Let’s review some of the benefits and drawbacks so you can make an informed decision.
Benefits of Leasing a Car
Now that you have picked out the car that you want, it is important to balance the financial aspect of it and make the big decision of leasing or buying. Leasing has many attractive options including:
Low Monthly Payments:
Typically a lease does not require a large deposit and can be gained at low monthly payments. This is a great choice for someone who is trying to keep expenses down and may not have a large cash reserve to buy a car outright. Be wary however of the extra charges that can add up like mileage limits, terminating the lease early, and unrepaired damage.
Fewer Repair Expenses:
Leasing terms are usually one to four years so repairs are often still covered by the manufacturer and/or car dealership.
Newer Car More Often:
If you are someone who enjoys having the latest technology and safety features, then leasing may be the way to go. After your term ends you merely return the car for a new car lease or take the option to buy the remainder of the lease that is due for a pre-set price. You never have to go through the major hassle of selling your old car back to a dealership or sell it independently.
No Loan Approval:
If your credit score is not great you may not be approved for a loan or you may end up paying ridiculous amount in interest. Leases usually bypass the loan approval process and make access to a car more realistic.
Benefits of Buying a Car
For many car shoppers, their lifestyle and budget encourages leasing, while others find that buying a car is more suited for their goals and budget. Here are some advantages of buying your next car.
Paying Less Over the Long Term:
While monthly lease terms may be less expensive than a typical car loan, the longer you own the car the lower your overall cost will be. In addition, you will be building equity and credit as you pay off your car.
Leasing a car usually comes with restrictions on how many miles can be racked up as well as repairing any damages like dents and dings. If you are often finding yourself with scratches, dents, dings, or wanting to accessorize your vehicle you may want to buy instead of lease. Also if you tend to commute long distances or travel often, the mileage limit may cause you to have a penalty at the end of the lease.
The Option to Sell:
As the car’s owner you always have the option to sell or trade in at any time, specifically at a time of your choosing instead of when the dealership lease ends.
Do you have questions about leasing versus buying your next car? Or maybe you have questions about your insurance needs for the purchase? Contact Phil Richard Insurance at 978-774-4338 or visit our website.