When it comes to leasing a car or buying a car, there are many factors that need to be taken into consideration. A few things that need to be weighed out is how much liquid cash you have, how much do you drive on a regular basis, how long do you hope to have your vehicle and your credit score. There are many other areas that need to be taken into consideration, but the above mentioned factors are a good starting point.
There are both pros and cons that come with leasing a car. One of the pros to this decision is a low monthly payment. Payments are normally lower when leasing a car in comparison to buying a car. When leasing a car, you will have the ability to drive a brand new car every few years when your lease term is up. When you enter a lease agreement, the future resale value of your vehicle is predicted and put in writing. That itself is reason enough to choose to lease a vehicle over buying a car. When you purchase a car, there is no way of telling how much the vehicle will be worth in the future. A really big bonus when choosing to lease a car relates to the car’s value. If the car depreciates faster than predicted, it has no negative effect on your lease agreement. This could actually be a plus in your favor if you decide to purchase your car after the lease agreement is over. Another great aspect associated with leasing a car is that when the vehicle needs repairs, there is no out of the pocket cost to the lessee. Because the vehicle is still covered under the factory warranty, the repair costs are already covered.
There are a few cons when it comes to leasing a car. For one, leasing is hard to do if you have bad credit. Another negative aspect of following this route is if you want to terminate the lease agreement, it could be pretty costly. Finally, when leasing a vehicle, you are only allowed a limited number of miles per each year of the contract. Usually, the driver is only allowed 10,000 to 12,000 miles per year.
There are some pros and cons that come with owning a car as well. If you choose to change or modify the vehicle, you have the freedom to do so. If you do not like the color of the car, you can have it painted. If you do not like the stereo system in the vehicle, you can purchase another one and have it installed. Since you are the owner of the car, there is no yearly mileage limit.
There are some cons when choosing to purchase a car. When you choose to own a car, you are choosing to make payments on an asset that will only depreciate with time. The down payment to purchase a car is higher than the up-front fee to lease a car. A car dealership will usually ask for 10 to 20 percent of the value of the vehicle as a down payment when buying it. Depending on the make and model of the car, that can be very pricey. If you own a car, you will most likely keep it after the warranty has ended, and the cost of repairs and upkeep will come out of your pocket. As soon as a car is driven off the dealership lot, it starts to lose its value. As a car owner, this depreciation is a negative aspect that multiplies over your years of ownership.