When the time comes to trade in your current vehicle and to get a new car, truck or SUV, you have the choice to either purchase or lease your next vehicle. Car buying is the most traditional option available, and many drivers continue to pursue this option out of a matter of habit. However, with a closer look at what car leasing offers, you will see why this may be the best option overall for you.
A Lower Monthly Payment
If you are looking for the most affordable vehicle solution for your monthly budget, a car lease is usually the best option for you. In fact, the monthly savings of a car lease can be substantial, and you should consider both options before you make your decision about the right option for you to use with your upcoming vehicle plans. Your car loan payment will be dependent on the term length, so it is possible to choose a very long term and to obtain a very low monthly loan payment. However, when you choose a long term on a car loan, you likely will find yourself upside down in your vehicle, and you may be tied to the car for many long years as you try to pay down the debt.
A New Vehicle Every Few Years
Some people enjoy driving a vehicle until it completely dies, and this may be within a decade or two in most cases. Most people, however, grow frustrated by decreased reliability and increased repair costs with an older vehicle. They also may be embarrassed about the condition or style of an older car. If you enjoy driving a new, stylish vehicle with the latest features, replacing your car every few years is a great option. A car lease allows you to do this in a cost-effective and convenient way.
All vehicles require regular maintenance, such as tire rotations, oil changes, transmission services and more. These costs can add up to a substantial amount. When you purchase a vehicle, you should include these maintenance expenses in your regular budget. However, when you lease a vehicle, the maintenance expenses may be paid for by the dealership. This means that you can enjoy a far more affordable driving experience when you lease your car rather than own it outright through a car loan.
The Issue of Being Upside Down in Your Car Loan
Many people view cars as an asset, but this is not the case. Cars usually depreciate in value, and they do so at a very rapid rate within the first few years. This means that those drivers who purchase a car must put down a large down payment in order to avoid being upside down on their car. To stay ahead of depreciation, you also must choose a lower term length. This can create very high loan payments. Vehicle maintenance and mileage also play a role in the vehicle’s value and rate of depreciation. Unless you mostly or fully pay off your loan before you trade the vehicle in, there is a very good chance that you will need to come out of pocket when you get your next car because you may be upside in your current car.
The Concern About Trade-In Fees
Some people are deterred from getting a car lease because of the idea that the fees are high. There are fees when you take possession of the car as well as when you trade the car in. These latter fees include a surrender fee as well as the possibility of tacking on an extra mileage fee. However, keep in mind that you likely will have to pay a fee when you turn in a car purchased with a loan, and your mileage on the car will play a role in that transaction as well.
There are many factors to consider when trying to decide how to take possession of your next vehicle. While buying a car with a loan may seem like the best option initially, you can see that there are clear benefits of leasing a car in many areas. As you compare the options, pay attention to how each of these benefits will impact you.