The differences between leasing and buying a new car are significant, and it’s time to break those down for consumers in the market for a new car. It’s not always easy to know what might work best for consumers without knowing their financial situation, their wants and needs, and their preferences, but it’s easy to help you understand how to get what you want for the least amount of money. If you decide to lease, just remember you are limited to how many miles you can put on the car annually. If you drive long distances and put ample miles on your vehicles, you are not an ideal candidate for a lease. If you don’t put too many miles on your vehicles, there is no reason not to consider a lease.
Payments on Leasing vs. Buying A New Car
The winner here is the lease. You’re not paying for an entire car. You’re paying only a portion of your vehicle called depreciation. This means you’re not paying a payment each month that’s too much money. You’re typically paying less than $20,000 to drive a car for around three years whereas you might spend $60,000 to buy the same car and make payments over the course of five years. The difference is palpable, and it’s easy to see why so many people prefer to lease.
When It’s Time for A New Car
When you want a new car every few years as most people do, you don’t have the same issue leasing a new car you do buying one. When you take a purchased car into a dealer as a trade, you must find out what it’s worth. It’s almost always worth less than what you owe on your car note, which means you either make a big down payment or roll excess funds into a new car. That makes everything more expensive, and it often takes the car you really want out of the equation as it becomes too much to purchase.
Leasing means taking your current car back to the dealer when the lease ends, choosing the new one you want to drive home, signing some paperwork, and going home. There is no trade-in value, no payoff amount, and there is nothing being rolled into your new car loan from your old one. It’s yours free and clear. As long as nothing has happened to your credit score recently, you will get to take home a new car in half the time and with one hundred percent less stress.
Fewer Fees and Out-Of-Pocket Expenses
Leasing and buying are different. When you buy a car, you add on the entire amount of sales tax on the full price of the car to your bill. When you lease, you pay only the sales tax on the small amount you finance. When you buy a new car, you get a warranty. When you lease a new car, you get a warranty. The difference is your lease always has a warranty. You don’t keep it long enough for it to expire like it does when you buy a car. You never pay for repairs, maintenance, and you never worry about expensive bills popping up unexpectedly if something breaks down.
You Get A Nicer Car When You Lease
When you buy, you have to worry about the monthly payment. It’s more expensive than it is when you lease because you’re paying more. Buying a car might mean you can afford a Honda sedan that’s brand-new if you’re trying to keep payments within a certain amount. If you lease, you can forgo the Honda and lease the Lexus or the BMW for the same amount you’d pay to buy the Honda. You can also stick with the Honda you love and pay so much less on a lease payment than a purchase payment.
Unless you drive tens of thousands of miles every year, leasing is almost always the answer to your needs. You get what you want, you get what you need, and you always have a new car to look forward to. This makes car shopping fun and enjoyable, and it makes it less of a hassle for the rest of your life.