Car Buying and Leasing: Things To Know

If you want a new vehicle and are trying to decide between car buying and leasing, there are certain things that you should know. Determining whether buying or leasing is best for you takes some time, thought and planning. Each option has its advantages and disadvantages, depending on your specific situation. Consider the following information before you go ahead and buy or lease that new Toyota, Mercedes or Land Rover that you've had your eye on.

• You do not own the vehicle
• You cannot modify the vehicle as if you own it (paint it, install aftermarket parts, etc.)
• A mileage limit is imposed (extra fees must be paid if you go over)
• Terminating a lease early can be costly
• You do not have the option of selling the car
• A down payment is not usually required
• You can save money in the short-term
• If leased for the length of the manufacturer's warranty, you will never have to pay for repairs
• Lower monthly payments than financing for a purchased car
• Leasing may be good for people who do not plan to put lots of mileage on the car
• Leasing may be good for people who want to get a new car every few years
• A good lease will offer a lease price that is lower than the manufacturer's suggested retail price of the vehicle
• Leasing cars that retain a high percentage of their value will save you money (they depreciate less)
• With closed-end leases, you give the car back after the lease is up
• With open-ended leases, you purchase the car at the end of the lease term for a predetermined amount
• When depreciation is considered, closed-end leases are usually safer than open-ended leases

• You have the ability to own the vehicle
• You have the possibility of being free of monthly payments (once the car is paid off)
• You can modify the vehicle as you wish (certain modifications may void the warranty, however)
• You can put as many miles on the car as you wish (although doing so will diminish its value)
• You can sell the car if you please
• Buying is good for people who want to keep one car for many years
• Buying may be a better option if you can obtain a financing plan with no or a very low interest percentage
• Monthly payments will most likely be higher than monthly payments for a lease
• Down payments, typically in the thousands of dollars, are usually required
• Buying may hurt your pocketbook if the value of the car depreciates greatly and quickly
• You may have to pay for costly repairs once the manufacturer's warranty expires

Deciding whether to buy or lease a car should involve careful consideration of the facts surrounding each option. Once you know these facts and the differences between buying and leasing, you should be able to make the right decision for your specific situation.