Buying a car versus leasing it. That decision continues to plague millions of people each year. There are a lot of factors to weigh and despite what some people claim, one choice is not necessarily better than the other. The decision depends mostly on the individual buying the car. Today, I’ll provide a point-by-point overview comparing the most important factors to consider.
Regardless of whether you’re buying a new or used car, or leasing one, you’ll need to pay registration fees, taxes, and a down payment. A lease will also require a security deposit (usually refundable later) and the payment for the first month. On the surface, it’s impossible to tell which is better.
Size Of Payments
You’ve probably heard that a lease offers “more car for your money.” This refers to the size of the monthly payments. In effect, the payments you make on your car loan are always higher than lease payments on the same make and model. The reason why loan payments are higher is because the value of the car is built into the payments. With a lease, you’re simply paying for the depreciation.
Mileage And Usage
Leases carry mileage caps. A dealership will usually build a cap of 12,000 miles into the contract. If you drive more than that amount during any year of the lease, you’ll pay a fee (and it’s often hefty). You may be able to negotiate a higher annual cap, but it might drive your lease payments up. On the other hand, if you’re buying a car, you can drive it as much as you’d like. That is, there’s no annual mileage limit.
Custom Car Parts
When buying a car, you can add any parts you’d like. Whether you’re doing it for aesthetics or to bolster its performance on the road, you won’t be limited by the terms of your contract. Leasing is different. While you can add or replace car parts according to your preferences, the vehicle must be returned at the end of the lease in its original condition. That means you’ll need to remove any customization you’ve done. If that results in damage, structural or otherwise, you’ll be charged for the repairs.
Lease Or Buy?
The biggest factor is one of ownership. After paying off your car loan, the vehicle belongs to you. You can replace parts, drive it as much as you wish, or do anything you’d like with it, including selling it. At the end of your lease contract, you’ll either need to enter another lease, buy the current car, or purchase another. That’s why the payments are higher for a car loan. In the end, consider how important each of the factors above is for your individual circumstances and preferences. That’s the most effective way of making the right choice for your lifestyle.