The Monthly Expense
With both a car lease and a purchase, you typically make an up-front payment to the dealership. Then, you are responsible for a monthly lease or loan payment. The monthly payment for a car lease is usually more affordable than a car loan payment. You can, however, always obtain a very long term on your car loan to generate a more affordable loan payment. When you do this, however, you likely will wind up upside down with your car. There are also fees when you return a leased or owned car in most cases. When you return a leased car, you typically will pay a final fee. You may think that there would not be a fee to trade in a car that you buy. However, many people do wind up upside down on their car because they want to trade it in while there is still a loan in place.
Some people buy cars rather than lease them because they view them as assets. However, most cars depreciate in value rather quickly after purchase. This means that unless you put down a very large down payment at the time of purchase, car buyers will be upside down with their purchase almost immediately. In most cases, it is financially savvy to lease depreciating assets and to purchase assets that appreciate in value over time.
The Lifestyle Experience
A typical car lease is two to three years long. This means that you will be able to trade your vehicle in every couple of years when you plan to lease vehicles. You will always be driving a shiny, new car that you are proud of. It typically will have all of the latest bells and whistles. If you plan to buy a car, you may need to hang onto the car for many long years until your car loan is paid off. By this time, the car may have scratches and dings. The features may be outdated, and you may even be embarrassed to be driving it.
Vehicle Care and Maintenance
If you plan to buy your car and own it for many long years, vehicle care and maintenance is critical. Proper maintenance can keep the car out of the repair shop and protect its value more successfully. However, maintenance can cost a fortune over the years. When you rent a car, most rental contracts provide you with free maintenance service for the length of your lease. This can help you to keep your vehicle costs to a minimum. If you plan to buy your vehicle, keep in mind that older vehicles tend to require more repair and maintenance work.
Some drivers are perfectly happy to drive their car for many long years, and some will even drive it into the ground. However, many people are taking advantage of the benefits associated with leasing a car. It is true that you will always have a regular lease payment when you lease your vehicle. However, the payment will be lower than a loan payment in most cases, and it covers maintenance and repair costs. As you can see, there are clear benefits associated with leasing over buying that you may want to take advantage of with your upcoming vehicle plans.