Car Leasing VS Buying: How To Compare?

The topic of car leasing vs buying comes up whenever somebody is considering getting a new vehicle. Each option has pros and cons, so in order to make the best decision, you need to carefully consider your own driving and spending preferences. Use these tips to help you compare car buying vs leasing.

Budget

The first thing you should consider when deciding whether to buy or lease is your budget. The typical lease will cost less per month than the typical car purchase. A lease also does not usually require an expensive down payment, although it may require a smaller down payment or some type of security deposit. The higher monthly payments for buying do offer some benefits, however. When you make payments for a purchased car, you are not merely paying rent, as you would be with a lease. With buying, you are establishing equity in your vehicle, as you'll own it as an asset. Additionally, a car purchase offers the buyer the opportunity to eventually pay off the car and be free of monthly payments. When you lease, you'll always have to make monthly payments. Finally, a leased car will enable you to save some money on taxes. Bought cars must have taxes paid on their full purchase price, whereas leased cars only require tax to be paid for the length of their use.

Maintenance

The next thing that any prospective buyer or lessee should consider is whether he or she will be bothered with a car's maintenance requirements. Usually, leased vehicles are new, and their lease terms coincide with the manufacturer's warranty. Therefore, a lessee never really has to worry about diagnosing a cars problems or paying for its repairs. A purchased car, on the other hand, may require you to pay for its maintenance out of your own pocket, once the manufacturer's warranty expires.

Use

The final, and perhaps most important, thing you should consider is how you plan to use your new vehicle. Leased vehicles carry with them a typical 12,000 to 15,000 yearly mileage limit. So, if you are the type of person who puts a lot of miles on a car, you may want to avoid a lease. If you go over the mileage limit, you should expect to pay 20 to 50 cents per additional mile. Leased vehicles also need to be driven with some degree of care, as abused cars will attack your wallet with extra wear and tear charges. So, to put it simply, if you want to drive a lot of miles or be worry-free about your driving habits, you should buy your next car.

By considering your budget, maintenance preferences, and your planned use for the car, you should be able to easily compare the benefits and drawbacks of car leasing vs buying. Once you determine how each option will affect you, you should be able to make the decision that best fits your lifestyle.