Buying or leasing a vehicle remains a viable option for those in the market for a new car. Consumers now have greater choice because dealers increasingly offer leases in addition to selling luxury and non-luxury vehicles. More consumers, including first-time car buyers, are looking to leasing as the price of buying a car continues to climb. Other first-time car buyers see the purchase of their first car as an investment and a milestone.
While consumers may know their budget, they don’t yet know their driving habits. Leasing and buying a vehicle each contain advantages and disadvantages that depend on the driver’s budget and how they plan to drive their car.
Considering Your Budget
Budgeting involves not merely the monthly payment, but also other costs incurred when signing the contract. It may be true that the monthly payments tend to be smaller when leasing over buying, it’s not that simple. In both a lease and a purchase, there are additional fees. Buyers negotiate this loan in addition to the down payment and other fees such as registration. Young buyers, in particular, should consider how they plan to get financed, even if they eventually own the car.
However, leases also come with other up-front costs due when the contract is signed. The lessee will be expected to come up with the first month’s payment, a refundable security deposit, sales taxes, and other fees. There are also unique finance charges as you are paying less on a vehicle’s worth when you return it back to the dealer. That said, lessees commonly pay less monthly over the time of their lease because they are not paying for the entire worth of the car over the life of the loan as buyers do.
How Invested Are You in Owning Your Vehicle?
This is a question the buyer should ask themselves while they consider their choices.
Leasing is advantageous in some ways. Some drivers have no desire to own a car longer than a few years. They are not concerned with the vehicle’s equity and may envision selling or trading in this now older vehicle as a hassle to be avoided.
Buyers take the opposite tack. While the value of their vehicle will depreciate, they see it as a long-term investment. When the loan is paid off, another fixed monthly cost is eliminated for as long as they keep the car in working condition. Moreover, buyers are free to customize their automobile to their heart’s content. And there are no final fees to pay; the vehicle now belongs to them.
What Kind of Driver Do You Plan To Be?
This may be the most important element to contemplate. A buyer can drive as many miles as they wish provided that they keep in mind that excessive mileage lowers a vehicle’s worth. Leases, on the other hand, invariably include limits on mileage. These limits typically cover 12,000 to 15,000 miles per year: mileage overage fees add up. All buyers should consider carefully how much they plan to drive.
They should also consider driving carefully. Automobile insurance is a requirement for all drivers. Leasing an automobile requires as much responsibility on the first-time driver as does buying. Both parties may wish to research cheap car insurance online. Collision and comprehensive coverage is required in nearly all cases as are other types of insurance depending on the state. As always, safe drivers come out ahead by whatever means they finance their vehicle.
First-time buyers should take lifestyle and budget considerations into account when deciding to lease or buy a new car. If you prefer monthly payments, and have a good sense of how many miles you plan to drive in a year, then a lease might be best. Conversely, if you are taking the long view and view your car as a long-term investment than buying a car might be the best option.
By: Mark Palmer