Buying vs Leasing Quick Tips
Buying vs Leasing Quick Tips
If you are in the market for a brand new car, you get faced with a tough choice. Do you want to buy or lease a new vehicle? Car leasing and car buying have an enormous amount of pros and cons but at the end of the day, it comes down to personal choice.
Sometimes, you can get lucky and find some great car lease deals, which makes leasing a great option. However, you might get more value at taking the hit and buying the car outright.
Here at DriveSmart, we want you to make a smart buying decision at every step of the way, from getting your new vehicle, to protecting your vehicle. Let’s jump into our quick tips on buying versus leasing.
Buying vs Leasing – The Difference
There is a very big difference between car buying and car leasing. Leasing a vehicle essentially means that you are paying to drive and use the vehicle for a certain amount of time. Usually, two to five years, which is fixed by the car dealership.
Lease deals are much more affordable than buying a vehicle, but you still pay monthly payments over the course of the lease along with an initial down payment and taxes. At the end of your lease, you return the vehicle back to the dealership.
When you buy a car, it means that you will have complete possession of your vehicle once it is paid off completely. Car prices can be expensive, especially on a new car which is why some people choose to lease rather than buy due to the high price tag on a new vehicle which is why most people purchasing a vehicle to own will look for pre-owned vehicles and used cars.
If you do however decide to purchase a new car and pay monthly fees. Those monthly fees will be much higher than a monthly lease payment. The benefit of purchasing a vehicle is that once it is paid off, the vehicle is under your possession for as long as you decide to keep it.
Pros of Leasing a Car
One of the main benefits of leasing a car is by having a low-cost monthly payment when compared to the monthly payments of purchasing a car. Another benefit of leasing a vehicle is that some dealerships will only charge a small amount of money to drive off the lot.
This is a great option if you want to drive the newest model vehicle at a lower cost, with the acknowledgment that you will be giving the vehicle back after the lease period. Most dealerships will give you warranty protection initially, but it will be up to you, to protect your vehicle once the initial warranty expires.
Cons of Car Leasing
The biggest downfall to car leasing is the mileage restrictions. Most dealerships will only allow you to drive 8,000 to 20,000 miles a year depending on the dealership and vehicle. This can be difficult if you commute long distances to work or go on long road trips often.
Typically, if you exceed your annual vehicle mileage allowance, the dealership will charge you lots of money for every mile exceeded. Another major con about vehicle leasing is the extra fees. The dealership will charge you fees on almost everything, including early termination fees on your lease.
Pros of Buying a Car
Buying a car allows you to never worry about mileage limits. If you own the vehicle, you can drive as much as you want. You can even rack up 80,000 miles or more in a single year if you wanted!
Another great thing about buying a car is that you don’t have to worry about the condition of the vehicle as much. Obviously, you’d want to keep your new vehicle nice and clean but in the event that something did happen, it’s just on you to fix it. You won’t need to worry about extra fees from the dealership.
Finally, one of the best benefits of buying a vehicle is the ability to sell or trade it once you are satisfied with using it, as long as it is completely paid off.
Cons of Car Buying
One of the biggest disadvantages to car buying is the monthly payments, as they are drastically higher than monthly car lease payments. On average, it could be $200-300 more than a lease payment. The dealership will also require a much higher down payment on the vehicle.
Finally, vehicle maintenance is on you. Owning a vehicle makes it your responsibility and in the event that the vehicle malfunctions. It will be up to you to pay for the repairs and fix them. This is why, at that point, we would recommend a DriveSmart auto warranty to protect your vehicle from any malfunctions or future repairs.
So what should you do?
It all comes down to personal preference if you are someone who drives long distances and manages finance well, purchasing a vehicle might be the better option. If you are someone who does not plan to use high mileage and doesn’t mind returning the vehicle eventually and keeping it clean, leasing is a great option.
Written by: Stephen Lubas