A Detailed Guide to Buying or Leasing a New Car
When looking to buy a new vehicle, there are multiple choices available for you. Either you can buy a vehicle or simply lease it for a limited period. Both the methods have suitability for different requirements. If you need a vehicle for short-term usage, there is no point in investing in a car and taking a financial hit of depreciation on this vehicle. However, for long-term ownership, buying is always a better option because it gives you the ownership of the vehicle along with many other benefits. Whether you decide to buy or lease a new car, there are certain disadvantages that you should be aware of. Here is an analysis of the pros and cons of buying or leasing to help you make a wise decision:
Why Lease a Car?
A leased car does not require preparing for loan applications and funding arrangements. There are no down payments and upfront expenses to be paid for this option. With a small price, you can simply drive home in a vehicle of your choice. The monthly payments are much lower for a leased car. In fact, they can be as low as 40% of monthly installments that you are required to pay if you bought the same vehicle through an auto loan. It allows you to drive the latest technology and model of a brand every two to three years. Companies also provide comprehensive warranties with cars to cover a major part of their repairs and maintenance.
What Issues May Arise?
With a leased car, you cannot enjoy the perks of ownership. Rather, you are required to return the car on expiry of the lease term. There are limitations on the number of miles that you can drive in this car. Also, the charges can be extremely high for ending the lease earlier than its term. If a major breakdown or excessive wear occurs, the full responsibility for repairs may fall back on you.
Why Buy a Car?
When you buy a car, you hold the ownership of the vehicle and you can enjoy it to the fullest. No need to worry about the number of miles displayed in the odometer or nearing the end of the lease term. The vehicle remains with you and it also fetches you a good resale value. This resale value becomes your equity for making the next purchase. As you own this vehicle, you can accessorize or customize it in any manner that pleases you. If you can manage to find comprehensive coverage for this vehicle, it becomes a good financial investment from a long-term perspective.
What Issues May Arise?
Despite the ownership of a purchased car, your financial budget can take a hit due to the heavy upfront costs that you need to pay. The responsibility of repairing this vehicle in the event of a mechanical breakdown occurring after the expiry of warranty term also falls on you.
Depending on these factors and your individual requirements, make a wise decision between buying and leasing a new car.