With an impressive array of technological advancements designed to improve safety, entertainment and drivability emerging from the automobile industry, some consumers might feel a little overwhelmed. One of the main choices that they will have to confront will be whether they should buy or lease a vehicle.
Get More For Your Budget
Most consumers are not in a position to purchase a vehicle by paying the lump sum. Typically, they will arrange loans to pay off the full price of the vehicle over a longer period of time. Leasing a vehicle is usually therefore regarded as the cheaper option. Instead of paying for the full price of the vehicle, consumers only need to pay the depreciation value during their lease term. So their monthly payments will be significantly less expensive than monthly payments on a loan.
With that in mind, the consumer will actually have more options when they opt for a lease. She could either go for a better model or keep the savings.
Fewer Repair Costs
Repair costs can be one of the most significant expenses associated with vehicle ownership. Since the consumer actually owns the vehicle outright, she bears the financial responsibility. On the other hand, vehicle leases typically come with a warranty that will cover the cost of repairs. Depending on the type of warranty, that may include maintenance expenses (such as oil changes) or replacement jobs such as brakes and tires.
There is no skirting property taxes. If a consumer were to purchase a vehicle for $30,000, she would have to pay significant property taxes. When leasing a vehicle, she would only be responsible for paying taxes on the lease, which will be far less expensive.
Drive A Luxury Vehicle
If you have done a bit of research on leasing, you might have noticed that a lot of leasing companies offer high-end luxury models. This is because these models have a high residual value. The residual value of a model is the value that the vehicle has after it has depreciated. So consumers can drive a luxury vehicle for an affordable price through leasing, and yet your friends and colleagues will be equally as impressed with your new ride!
Avoid Bad Investments
One of the fears associated with purchasing a vehicle is that something could happen to it. There could be an accident or the transmission could start slipping. If you have already invested thousands of dollars into owning that vehicle, that could be pretty devastating. With a lease, consumers are not totally committed to and invested in that vehicle, so something like that would not be as detrimental.
Buying Is Harder In Unexpected Circumstances
Sometimes when consumers are in the market for a new vehicle, it is because something happened to their old one. There was a terrible accident or the car broke down. When something like that happens, they probably did not save money for the down payment on a new vehicle. The down payment can be anywhere between 10%-20% of the value of the car. On a vehicle that costs $30,000, the consumer will have to pay between $3,000 and $6,000. Most people do not have that kind of money laying around when the unexpected happens.
Overall, there are a lot of factors to consider. But with benefits like a lower down payment, lower monthly fees, fewer repair costs, tax benefits, and a smaller commitment, leasing is a wise option.