 Leasing VS. Buying: Tips For The Consumer
Posted by carsandtrucks on Monday, October 29 @ 11:24:19 PDT
It is time to replace your current vehicle and you have just been quoted a monthly
payment by the salesperson. You are feeling nausea overcome you as you consider signing
the purchase agreement. You have to have transportation, what choice do you have. Well,
there is leasing the vehicle. Leasing is another way to finance a vehicle but at a lower
monthly payment. That is because at the end of the lease term you don't own the vehicle
the leasing company does. Simply put leasing is paying for the portion of the vehicle you
are going to use. At the end of the lease term (generally 36 months) you can either
purchase the vehicle at a predetermined price, lease another vehicle or just walk away.
When leasing rather then buying you are driving a vehicle that is in warranty throughout
the term of the lease. Your vehicle expense is limited to maintenace only. If you are a
person that desires a new vehicle every 2-3 years leasing is a great alternative. So why
doesn't everyone lease? Well, because there are some negatives. You are limited to the
amount of miles you can drive during the lease term. The mileage is usually 12000 miles
per year. There is a penalty of about .15 per mile for every mile
driven beyond the
alloted mileage. If you drive 15000 miles or more per year this can get expensive fast.
Also at the end of the lease you own nothing. Even though a vehicle is a depreciating
assett there is still a value to the vehicle when it is paid off. This value can be used
as trade in for your next vehicle or you can continue to drive it payment free. Buying vs
Leasing is often about lifestyle. If you prefer a new vehicle every 2-3 years, expect to
always make car payments, like the peace of mind of repairs being covered by warranty
leasing may be for you. If you want to drive a vehicle you owe nothing on, have some
trade equity then buying is the way to go. Either way take time to educate yourself on
the pros and cons of each option.
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