Buy vs Lease
Drivers who are looking at upgrading their vehicle must consider all their financing options. One of the age-old questions is whether to buy or lease a new vehicle. While there are benefits and drawbacks to both, it often comes down to what works best for the individual, their financial situation, and their lifestyle. Here’s a look at car buying vs. leasing.
The Difference Between Leasing and Buying a Vehicle
When someone buys a vehicle, it’s theirs. If they buy it with cash, they own it outright, and if they take out a loan, they own it once they pay off the loan. Leasing differs from buying in that the driver doesn’t own the car. They pay a monthly payment for the right to drive it for a specified length of time. The average lease lasts between 24 and 36 months. Once the lease agreement ends, the driver needs to return the vehicle to the dealership, or they can exercise their option to buy the car at a predetermined amount.
The Costs Associated With Buying and Leasing
The costs associated with a car purchase vs. a car lease are very different. Leasing is often an appealing choice because the monthly payments can be significantly lower than the monthly payments for a purchase.
When motorists lease a car, they only pay for the use of the vehicle for a limited time. The upfront costs are often lower with a lease because drivers don’t have to come up with a large down payment. People with a good credit history can often start a lease without putting any money down and still enjoy a lower monthly payment than they would if they bought the car.
When someone takes out a loan to purchase a car, the monthly payments are usually higher, but their payment goes toward creating equity in the vehicle. Motorists can choose to sell or trade the car when they want to purchase a new one and then use the money toward their next vehicle. A typical auto loan ranges from three to seven years, whereas a lease only lasts for two or three years.
Buying vs. Leasing Flexibility
A lease is not a good option for drivers who like to make upgrades or changes to their vehicles. In most cases, when motorists bring a leased vehicle back to the dealership at the end of the lease term, it needs to be in good condition or else they must pay extra for wear and tear. Lease terms also specify that changes cannot be made to the vehicle.
Leases are also less flexible when it comes to the number of miles a vehicle can be driven. The lease agreement will specify the limit, and if drivers go over, they’ll have to pay extra for each mile. The amount can range from 10 cents to upward of 50 cents for each mile.
Buying a car gives drivers more flexibility. Since they own the vehicle, it’s theirs to do what they want with. They can add aftermarket accessories, swap out the tires or stereo, or change any other item they want to update. They can also drive the car as many miles as they want.
Long-Term Benefits of Buying
For drivers considering the long-term value of a vehicle, it’s better to look at auto financing to purchase a car. Buying means investing in an asset that they can keep for as long as they want. Even with depreciation, vehicle owners benefit from the value of their car when they decide to sell it. The most significant long-term advantage of owning a car is the financial benefit. Overall, buying a vehicle and keeping it for as long as possible is more cost effective.
Long-Term Benefits of Leasing
Leasing is a good idea for motorists who like the idea of always driving a new car. Every few years, they can get the latest design, newest technology, and most up-to-date features. When drivers lease a vehicle, they get to enjoy it when it’s new and in its best condition, so the maintenance costs are lower. Going from one lease to another can keep auto maintenance costs low for years.
New cars have bumper-to-bumper warranties that are usually long enough to last the entire length of a lease. This provides excellent warranty coverage the entire time the vehicle is driven. Lease agreements also often come with routine maintenance included in the lease agreement, allowing drivers to save on their regular services.
Who Should Buy and Who Should Lease?
Since leasing and buying both have pros and cons, it’s important for drivers to consider both before heading to the dealership.
Who should lease a car?
The following people should consider leasing a car:
- Drivers who always like to have a new vehicle.
- Drivers who put fewer than 10,000-15,000 miles on a car per year.
- Buyers with good credit.
- Motorists who take good care of their vehicle and keep up with regular maintenance.
- Drivers who want a more expensive car or a higher trim level.
Who should buy a car?
The following people should consider buying a car:
- Drivers with a long daily commute.
- Buyers who have cash saved up for a down payment.
- Buyers who are looking at long-term value instead of upfront costs.
- Drivers who keep their vehicles for many years.
- Drivers who don’t mind driving an older car.
Before making a decision about whether to buy or lease, drivers should consider the benefits and drawbacks of both. Over the long run, going from one lease agreement to another will be more expensive than buying a car, but there are many situations where leasing is the better option.
Are You Ready To Buy or Lease Your Next Vehicle?
Whether you’ve made a decision to buy or lease or you still have questions, we can help. Give us a call or stop by one of our Gerry Lane Enterprises locations in Louisiana. One of our finance professionals can explain all your options, answer your questions, and help you determine what’s best for you.
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