Getting a new car is a major decision. When you are looking to get a new car, the two biggest options available to you will be to either buy or lease the car. While there are some advantages that come with buying a car, there are also many different benefits that come with leasing a car. Before deciding whether you should buy or lease a new car, there are a variety of factors that you should take into consideration.
Less Monthly Expenses
The main advantage that comes with leasing a car compared to buying one is the fact that it is much cheaper on a monthly basis. When you buy a car, you will normally have a five-year loan. For a $30,000 car, this normally equates to around $550 per month. If you lease a car for a three-year term, with a standard mileage allotment, your monthly payment will normally be below $300 per month. This provides with a lot of additional money that you can save for any other purpose.
Less to Pay Upfront
While the lower monthly payments are very attractive, many people are also attracted to the low upfront costs that come with leasing a car. When you buy a new car, you will have to pay taxes on the full value of the car and put forth a down payment in order to qualify for a loan. When you lease a car, you will only have to pay taxes on the amount of the car that you will use, which is about one third of the total tax bill. Most car dealerships also are willing to forego an initial down payment. On a combined basis, this can save you thousands of dollars up front.
Much Lower Maintenance Costs
When leasing a car, you will likely incur very low maintenance costs. In the majority of situations, the car lease will require you to return the car before you drive 40,000 miles. This point in the car’s life is normally well ahead of when normal major mechanicals, including the engine and transmission, start to struggle. Furthermore, most lease deals also come with a compelling maintenance program that will provide you with free oil changes and other service over the life of the lease term. This alone could save you hundreds of dollars per year, compared to the maintenance costs you will incur when buying a car.
Flexibility of Car Ownership
When you lease a car, there is also an incredible amount of flexibility compared to when you buy a car. When buying a car, you are normally committing yourself to the car for five years or more. If you try to sell the car within the first few years of ownership, it will likely be worth far less than the balance on the auto loan. When you lease a car, you will be able to choose a lease term as short as two years in length. This allows you to try out a car for a few years before making a larger commitment to it. If you truly love the car that you are leasing, you will always have the option to buy it at a discount at the end of the lease term.
While there are many advantages to leasing a car, the one disadvantage is that you will never own the car outright. If you are fine with driving older cars and dream of never having a car payment, then it may be better for you to buy a used car, make the payments, and eventually own the car outright without any monthly payment.