Leasing Vs. Buying A Car
What are the differences between leasing vs. buying a car? What do you need to consider about each?
You likely tackle this issue every time you consider shopping for a new car. Do you lease, or do you buy? Here are the main differences.
• You don't own the car. You have to give it back when your contract is up, unless you decide to buy it at that time.
• When you're done with the term of the lease, there may be a new payment to finance a new car or to buy the one you've been driving.
• You need to be careful with your car or face additional fines. If your car is determined to have wear beyond what is considered "normal," you'll face fines.
• The number of miles you may drive the car is limited.
• You risk having the vehicle depreciate in value more quickly than you anticipate.
• You get to return the vehicle at the end of the lease, pay any final costs, and be done with the car.
• If you want to end your agreement early, you face additional charges.
• Your monthly payments are typically less than loan payments.
• Your initial costs include a security deposit, a down payment, taxes, registration, and your first month's rent.
• You own the vehicle and don't have to give it back when you've paid off your loan.
• When you're done with your payment period, you have no more costs beyond those relating to maintenance.
• You can have as much excessive wear and tear on your vehicle as you want, but this kind of damage will diminish the vehicle's resale value.
• You can drive as many miles as you want.
• When you re-sell your vehicle, you will have to account for the likely depreciation in the market value at that point in time.
• You may face having to trade or sell the vehicle when you decide it's time to get a new car.
• If you end the loan early, you are responsible for paying off the loan.
• Monthly loan payments are higher because you are paying for the entire price of the vehicle plus interest and other charges.
• Your initial costs include a down payment, taxes, registration, or the cash price.