When it comes time to get a new car, we all face the same question – should I lease or buy? Leasing and buying are two very different options, and each one comes with its own pros and cons. Before you go out and begin car shopping, it’s a good idea to know some of the considerations to keep in mind. By knowing the differences between leasing and buying, you can better prepare yourself when it comes time to work with the dealership, and get yourself a deal that is right for you.
The first thing you can think about is how long you plan on having the car. If you’re someone who likes to get a new car every couple of years, then a lease is probably better for you. With a lease, you typically have the car for 3 years or so, and then at the end you have the option of leasing a new car, or purchasing your current car at a reduced amount. This allows you to switch to a newer model car, without changing your monthly payments too much.
On the other hand, if you tend to hold onto your car for years at a time, then buying it will be better over the long term. Leases tend to be cheaper in the short term, while buying is cheaper over a longer period of time – making buying the better option for the long run.
How Much Do You Drive?
Next, you should think about how much you drive your car. Many leases come with a mileage limit that you need to stay under through the length of the lease. For example, your lease may allow you to drive 12,000 miles per year, for the three years of your lease. If you go over this amount, you end up having to pay more. So if your car is going to be primarily for your commute to work, or around your town, then a lease is probably fine. However if you’re going to be doing a lot of cross country driving, buying your car will allow you to not worry about the miles you’re putting on the car.
Do You Plan To Modify The Car?
Many of us like to modify our cars. For instance, we might install a new speaker system, or perform a number of other upgrades. When you lease a car, you do not technically own it, and therefore cannot perform upgrades on it. If you’re someone who wants to perform modifications to your vehicle, then you are better off purchasing it, and retaining full ownership of the vehicle.
What Can You Afford?
Finally, the most important thing you need to consider is what you can afford. The amount you have to pay at the dealer, and then each month, will vary considerably between a lease and a purchase. Typically, purchasing a car is more affordable in the long run, however you may end up with higher monthly payments, and the need for a large down payment when you purchase the car.
With a lease, you will likely have a lower monthly payment compared to purchasing the car, but will end up paying more by the end of the lease. Essentially, you need to decide how much you can afford today, how much you want to pay each month, and how much more you are willing to pay over the longer period of time if it means getting discounts in the first two areas. While dealers are able to work with you to find a price that works for you, the above principles tend to hold when comparing leases v.s purchases.
Make The Choice That Is Right For You
In the end, when comparing leases against buying a car, there is no right choice. It all depends on what you’ll be using the car for, how much you can afford, and what your long term plans are. This means that you need to think about your answers to these questions, and then you can determine which method is best for you. Doing so will allow you to skip the dealer auto broker, and make a better deal for yourself.