Some people choose to own a car and some people choose to lease. It all depends on the person and their individual needs. Contrary to popular belief, leasing is not “renting” a car. Both auto buying loans and auto lease loans are two different methods of auto financing. Leasing a vehicle just means you are financing the use of it and when you get an auto loan, you are financing the purchase of the vehicle. When deciding on whether to buy or lease, you will want to consider all of your options. Both leasing and owning come with benefits and drawbacks. Ultimately, it comes down to what you feel is best for you.
When it comes to purchasing a vehicle, you pay for the entire cost of the vehicle, no matter how many miles you put on it or how long you keep it. Monthly payments are higher than when you lease a vehicle. When you purchase a car, you make a down payment, pay the sales tax, and then finance the rest. Sometimes you can include a down payment and tax into your loan. Your interest rate will be determined by your loan company. Down the road, you may decide to sell or trade in your vehicle for it depreciated value or it’s trade in value.
If you decide to lease a vehicle, you will only pay for a portion of the vehicle, which is the portion you will use during the time you have it. You do not have to make a down payment when you lease and your tax is included in your monthly payments. There may be other fees you will be required to pay that you wouldn’t have to pay if you purchased your vehicle such as lease fees and a security deposit. At the end of the lease, you can either return the vehicle or purchase it for at the resale value.
The cost of a short term monthly lease is much less than the cost of buying a new vehicle. For the same car, same price and same down payment, monthly lease payments will be much lower than loan payments. Up to 60% lower. But the long term cost of leasing will be significantly higher than the cost of buying.
The major things to think about when you decide between leasing and purchasing are your personal preferences. If you like driving a new car every 2 to 3 years and you want lower monthly payments, leasing may be for you. Just keep in mind, there is a certain number of miles you will need to stay under when leasing and you will need to keep your car regularly maintained. If you don’t mind higher car payments, and you prefer to build up some equity in your vehicle, owning is the way to go. You will be able to drive your car as much as you want and once you pay off your loan, you won’t have to worry about anymore payments.
The last option for driving the latest model of car at the lowest price is to take over someone else’s lease payments. It is cheaper than buying and cheaper than taking out a new lease. The major benefits are no down payments, no hassles and no fees. But again, it’s all up to the person, their lifestyle and what their preferences may be.