One of the biggest choices and investments that people have to make is getting a new car. When looking to get a new car, the two main options are to either lease the car or buy the car. Prior to determining which option is better for you, it is important to consider all of the pros and cons that come with car leasing, compared to buying a car.
Lower Monthly Payment
One of the main advantages of leasing a car, compared to buying it, are the lower monthly payments. When you lease a car, you will typically have it for only a two or three-year period. Over this period of time, you will only have to pay for the amount of the car you use, which is estimated at the time that the lease is signed. In most cases, the residual value at the end of a three year lease is equal to two-thirds of the original purchase price, which means that you only have to pay for a third of the car value over the term of the lease. This can help to cut the monthly payment on a new car by almost half, compared to buying it.
Low Maintenance Costs
Another advantage of leasing a new car is that you will have low maintenance costs. Maintenance costs are lower with a car lease than buying it for a number of different reasons. One reason is because leased cars are typically given back to the dealer after the first 30,000 to 45,000 miles are driven. Most major car replacements, including new engines and transmissions, occur much later than that point. Furthermore, most new car leases come with a free service plan, which can include free oil changes and other routine maintenance over the life of the lease.
Another advantage of leasing a car is that you will have less commitment with the car. When you are buying a new car, you should expect to drive it for five or more years before selling it. Any sooner than that and you could end up experiencing a big loss. When leasing a car, you will only have to drive it for 2-3 years. This provides you with the flexibility to change cars and vehicle types on a fairly regularly basis, which is ideal given lifestyles and car needs also tend to change over time.
Never Own Car Fully
While there are some clear advantages to leasing a car, there are some disadvantages as well. One of the main disadvantages is that you will never own the car completely outright. When buying a new or used car, most people will take out a car loan that will be paid off over a 5 to 7 year period. Once the last payment has been made, you will no longer be required to make payments on the car, which can provide a big financial relief. However, the payment savings can be somewhat offset by the fact that these older cars can require more frequent maintenance and repairs, which can be expensive.
In conclusion, when looking to get a new car, the two main options that you will have are leasing and buying the car. Prior to making a decision, it is important to consider all the pros and cons that come with leasing versus buying the car.