Obtaining a mode of transportation can change the way one lives. Being able to zip around town is convenient and empowers people to lead a life where they aren’t held back or reliant on other people to get from point A to point B. But a common question when investigating a car is: to lease or buy?
Leasing
Leasing a car is one way to be behind the wheel. While leasing you’re not on the path to car ownership, but you have transportation access. You’re basically paying for the car depreciation that occurs over the length of the lease. Leases also typically offer a lower monthly payment. You can get a more than a decent car at a fraction of the price. At the end of the lease, you drop the car back off at the dealership. You don’t have to worry about resale value, because that is not your responsibility. With leasing, it is a significantly smaller down payment, and in some cases, no down payment is required at all. However, the more you put down, the lower your monthly payment will be. So, it depends on how much extra cash you must spare. If you are someone who likes to explore the latest and greatest car technology, you might not want to buy a car because you love exploring the newest features cars are offering today.
There are some other factors to consider when deciding to lease or not. Most leases have a mileage restriction, so you’re probably not in the clear to take a cross-country trip or have total freedom. You don’t own it, and the dealership excepts you to return it within a specific type of condition. Additionally, if there is excessive wear and tear on the car, you might be charged extra. Dealers look for people leasing to have excellent credit as well. You won’t have any equity in the car, because you must give it back to the dealership, you won’t walk away with any cash for your next vehicle.
Buying
When you buy a car, it has the potential to be yours. If you guy is wish case, you will own it outright immediately when you sign the paperwork. However, most people can’t afford to put down that much cash all at once. In that case, you take a loan, and the bank owns it until you pay it all off. Most people know that once you drive a car off a lot, it loses a significant amount of value. It’s wise never to buy a brand-new car. Buying a model that is a year or two old is a much smarter financial decision if you want a newer vehicle. With your car, you won’t have to worry about how many miles you put on it. You can work for lyft or uber, or use your vehicle in any way you feel fit. You can add any customizations to your car, and if you are on soccer carpool, you don’t have to worry about the grass, dirt, or a cleat puncturing a leather seat. Its all yours, so the wear and tear are your responsibility. Interest rates can be high with a car loan, but because of how high of demand owning a car is, getting a loan isn’t overly burdensome, even if your credit needs some work.
Buying a car requires more money down in the beginning, and you can end up paying a lot more over time because of interest. These types of payments are typically more expensive than a monthly lease payment. When buying a car, it is always smart to think about resale value. Some, but all not all people, will get a new car while there is still a lot of life left of their first car. Some cars last longer than others, so thinking about how much you will get if you sell it is smart for your financial future.
If you’re looking for a vehicle soon, there are pros and cons to getting your next car. Now that you have a little more information about buying versus leasing, you can make an informed financial situation that best fits your situation and needs.
Jazmin is an avid supporter of civil rights and is passionate about open discussions
about race, culture and current politics. She was a research assistant and loves the
pursuit of knowledge.