How Long Will You Keep the Car?
If you want to trade in for a new car every 2 years, leasing would be the better option for you. You’re essentially paying to rent the vehicle long term before trading it in for another. A car owner who purchased a car then turned it in within a few years wouldn’t get much money for the car since it would have depreciated significantly. The depreciation for a leased car isn’t the concern of the person who does the leasing. The monthly payments for use of the car have depreciation costs factored into it.
Are You Rough on Your Vehicles?
A driver who doesn’t ding or scratch their car is a driver who should consider a leased car. If you are constantly finding unexplained scratches or dents, you’ll end up paying a lot of money for the repair of the car. While you might be able to ignore scratches on a car you own, a leasing company will charge you for those kinds of repairs.
What is Your Available Savings for Fees versus a Down Payment?
The upfront costs for buying a car include the massive down payment, registration and insurance fees as well as the title costs. You’ll also have to make the first payment on the loan within a few weeks. For a leased vehicle, you’ll forgo a large down payment and have to pay a refundable deposit for security purposes. You’ll be charged for taxes and the first month’s payment. Overall, the savings you’ll need to drive off the lot in your car will be smaller when you lease.
Should the Monthly Payments be Low?
If you have a limited amount of money each month for payments, you should put leasing ahead of buying. With a loan payment, you’re making a monthly deposit on the entire cost of the vehicle. It’s much like having a car on layaway. At the end, the car will belong to you. In terms of leasing, you’re paying a minimal fee for the use of the car plus some costs for depreciation.
Do You Want to Customize Your Car?
When you don’t own the car, you’re not able to make changes to the car that will change the look of it. On the other hand, you can make changes that can be changed back before returning the car. If you wanted to add new tires and rims, you would only need to replace the original tires when you returned the vehicle. Changes that are permanent are not permitted.
Will You Have Money for a Good Maintenance Routine?
As a car ages, it requires more maintenance and repairs especially if the car wasn’t maintained properly at the beginning of your ownership. It can seem as if between maintenance and repairs there is money to be spent monthly on the car. As a car owner, it will fall upon you to find the money for a car maintenance routine as well as needed repairs. For a leased car, you’ll only need to bring it in to the shop for the company to care for the vehicle. They have a vested interest in keeping the car in the best condition possible.
Do You Drive Your Car for Business?
If you drive your car as part of your business, you can deduct some of the leasing and finance costs on your taxes. Car loan interest can’t be deducted when you file your taxes at the end of the year. The IRS has guides that will walk a business owner through the process of deducting depreciation for the leased car based on the percent of business use the car has.
In the end, it’s a personal decision based on your finances and purpose for having the car. Leasing is a great way to save money on a new car down payment as well as the monthly payments due.