One of the first items to compare is the monthly payment. In most cases, a lease will have a much lower payment than purchasing the vehicle. There are essentially two reasons for this. First, when you are purchasing a vehicle, you will usually have a loan payment for at least five years; on the other hand, when you are leasing a vehicle, you will usually only have the lease payment for about three years. With the vehicle purchase, you will be paying for the total cost of the vehicle after your down payment. This is usually in the tens of thousands in dollars. With a lease, you are not paying for the total cost; you are only paying for the depreciation at the end of the lease. This allows the payment to be much smaller.
Length of Loan Term
A second item to look at when comparing buying and leasing is the length of the loan term. With a purchase, the loan term will be for a considerable amount of years. There are instances in which people have spread their entire payment over nine or ten years. When this happens, the vehicle often experiences serious mechanical failures before the loan term is complete. The loan is spread out over so many years because the total cost of the vehicle is so expensive. However, with a lease, the term is much shorter. Most leases have a maximum of three years. Since the total cost of the loan payment is not as expensive, the loan term does not have to be spread across so many years. This allows people to feel that they will not be paying for a loan note on a vehicle that is seven or eight years old.
Length of Time to Getting a New Vehicle
A final consideration to take into account when determining whether to buy or lease is the length of time that it will take to get a new vehicle. With a purchase, there will be a number of years before you will be able to get a new vehicle. This is because it will take so many years to pay off the loan. If you get a new vehicle before the loan is paid off, then this amount will be added to your new loan. This will create a huge monthly payment. With a lease, you can get a vehicle as soon as your lease term has ended. This allows you to be able to get a vehicle pretty quickly, and it allows you to always have the most up-to-date vehicle.
As you can see, leasing a vehicle is a great option to consider. Not only can you get a new vehicle every few years, but you will also have a much lower monthly payment. Therefore, before you head to the car dealership for your next vehicle, be sure to consider a lease.