People want to buy a car for a number of reasons. Still, it is likely that the main reason is because you get to own the car. Many people romanticize the idea of owning a vehicle but may not realize that this might not be the right move. You should know the difference between car leases and car buying to find the right option for you.
Car ownership does have a number of perks that include the following:
The cash value of your car can be used to your advantage when you purchase a car. You can take out equity or even use it to refinance the car for lower payments down the line.
The car you are purchasing is yours, meaning you can alter the car in anyway that you want, and you do not have to worry about paying fees because you have not maintained the car.
All of this sounds good, but there are a number of negative aspects that could hit you hard if you do not concern yourself with the fine print. For example, the car is depreciating. That means it is going to be worth less than what you paid for it.
Americans have a hard time saving money, and financing a car will not likely help the situation. For one, the down payment is too much for some people. It could end up costing you thousands of dollars.
You should also know that your car warranty will likely end before you finish paying off your car. This means you are going to be responsible for expensive car repairs on your own, and this is on top of the car payments you may still be responsible for.
Keep in mind that the monthly payments are going to be based off of the entire value of the car at the time of purchase, which is the main reason people end up with large car notes.
Leasing a car
There are a few things most people know about leasing a car. For example, you do not own the car. People also know that the contract comes with limitations regarding the amount of miles you are allowed to drive each month. Those who go over these miles will end up paying a fee for each mile.
This might sound bad, but there are a number of good things associated with leasing a car. The following are just a few examples:
As you know, those who purchase a car will end up paying for any major repairs once the warranty is gone. This is something that is not going to happen to you because the lease is going to be up before the warranty expires. This means major repairs are not your responsibility. There is no need to find a good mechanic or worry that you are being overcharged.
Skip the Downpayment
You are going to pay taxes and some fees when you lease the car. You are also going to be asked to pay the first month’s lease installment, but that is it. Everything you are going to pay is but a fraction of what a person who is buying a car ends up paying since the down payment is a large sum.
Low Monthly Payments
You know that the payments on a lease are considerably lower. This is because you are only paying the depreciation value of the car, not the entire vehicle. You do have the option of buying the car at the end of the lease, at which point you will pay the value of the car, but it is a choice.
Those purchasing a car could end up paying on that car for five years or even loner if they refinance. This is not the case for someone who is leasing a car. You will pay your lease payments for about two to three years. Then, just return the car.
Now, you can see why it may be a wiser to lease a car than purchase one. Do not be afraid to ask additional questions because the person helping with your lease should be able to clarify all concerns.