The main question most people who want a new car have to ask themselves is whether it is better to buy a car or lease it for a certain amount of time. There is no right or wrong answer, as the best choice depends on the individual and his needs and possibilities. In some cases it is better to lease a car, while in others, it is clearly better to buy a car.
Buying a car certainly has its benefits. The best thing about buying a car is that you will eventually own it one day. After you have finished paying for the loan, the car will be yours forever, and you will be able to do anything with it. Another obvious advantage of buying a car is that you have no mileage limitation, so you can drive for as much as you want without dealing with any penalties. Buying a car works well for people who can afford down payments and paying the monthly rate plus interest and who want to own their car.
The drawback of buying a car is that some people will probably not afford the required down payments on a car, and the out of pocket cost is much higher. By applying on a loan, there is always the risk of being unable to make payments on time, and you can also get upside down on your loan, meaning that the car value will be less than what you still owe to the lender. Another drawback is that you will suffer the depreciation of the vehicle, although you will own it for later years.
Leasing is becoming a more attractive option for business owners in particular, especially the ones that entertain clients. By leasing a car, you don’t have to pay a lot out of your own pocket, as the down payments are low to nonexistent in some cases, and you will just have to pay for the leasing cost. Leasing is also a great choice, if not the only one in case you want a car that is more expensive than what a bank is willing to offer on a loan. Another benefit to leasing a car is that you will never get upside down on a loan, so the risks are much lower.
A downside to leasing a car is that you will never own it, although there is the possibility to transform the leasing contract to a purchasing one after the leasing expires. By leasing, you will also pay for the most depreciation in value instead of the dealership, and in the end the car won’t be yours. There is also a limiting mileage that is usually around 15,000 miles per year, and any extra mile will cost, so people driving a lot could face significant extra payments.
Depending on how much you drive, how much you can afford and what you need the car for, leasing may be better than purchasing a car, or the other way around. Study the benefits and drawbacks of buying versus leasing a car and choose wisely.