Whether you choose to lease or buy, it’s nice to know you have options when getting a new vehicle. Both alternatives come with advantages and disadvantages, so it can be difficult to know which choice to make. Here, we’ll compare leasing vs. buying , so you can make sure you’re selecting the right option when getting a new car.
So you’ve seen the ad heralding a low finance APR on a new vehicle or a fantastically low monthly lease option. Which is the better deal?
Most experts agree that determining the best option depends on several factors, including how long you intend to keep the vehicle. Lease payments are almost always cheaper than a car payment on a month-to-month basis because you are only paying for the vehicle’s depreciation, or how much it loses in value, over the length of your lease.
With a vehicle loan, you are paying for the entire cost of the car, minus down payment, over a predetermined time frame. As car prices rise, many consumers are finding themselves taking out car loans for five to eight years in order to make monthly payments affordable.
Consumer Reports has done a comparison of leasing a new car vs. buying one here. You can take a look, but the bottom line is this: You’ll put about the same amount down whether you’re buying or leasing, but leasing offers a more affordable monthly payment.
At the End of Payments
The advantage to buying a car is that when you pay it off, you own it. You can sell it to help finance another new car, or keep it to drive, free of monthly payments.
At the end of a lease term, the car goes back to the dealer. You’ll either need to take out a new lease or find a way to finance another new vehicle. You may even find yourself on the hook for additional payments if you’ve gone over miles, haven’t had regular maintenance performed, or violated another specifications of the agreement.
On the other hand, if you plan to purchase a new car every two to three years or you can’t afford the monthly loan payment, leasing is a good way to get yourself into a new car.
Leasing vs Buying Commonalities
Whether you lease or buy, you’ll be putting money down up front, and you’ll be on the hook for sales tax as well as personal property taxes if your state requires it. The good news is that dealers have been known to take on this cost themselves to lure you into signing.
You’ll also need insurance for both a leased vehicle and one you purchase, and since both the lien holder on a loan and the car company offering the lease want the vehicle repaired regardless of who is at fault for damage, you’re going to need comprehensive coverage.
At Bolt Insurance Agency, we understand the ins and outs of leasing vs buying a new car and work hard to get you covered right. Feel free to get a free quote to learn more about our auto insurance policies.