Auto Lease vs Buying a Vehicle
by: Sonja Griesbach
When it comes to buying or leasing a car the options can be confusing. To help you make an informed decision we have provided the information below. We hope you find it informative and useful.
When you buy the new or used car you pay for the entire cost of the vehicle. When you lease the new or used car, you pay for only a portion of the vehicle’s cost, which is the part you use during the time you are driving it.
Lease vs Buy?
Question: Is it better to buy a car or lease a car?
Answer: It depends. Both are great options but it depends on your personal situation which may be best for you.
Leases and purchase loans are simply two different methods of financing. Leasing is not renting as some people think. Leasing is financing the term or miles that you use the vehicle and purchasing finances the purchase of the vehicle. Leasing began as an economical way to provide vehicles for business use, but today has developed into a way for private individuals to drive nicer vehicles without the expense of buying the vehicles. If you are a small business owner, or use your vehicle exclusively for business purposes, then leasing may be a good idea.
There are pros and cons for both types of financing:
- Able to drive a new vehicle every two or three years.
- Low up front costs.
- Lower payments than purchasing a similar vehicle.
- Only pay for the portion of the vehicle that you use.
- Can invest money saved from lower payments to build equity in investments.
- Possible to deduct full payments as a business tax deduction. (consult your tax professional)
- Option to purchase vehicle at the end of the lease.
- Early termination of a lease can cause stiff penalties.
- Possible repair fees when vehicle turned in for items you might not fix if you owned the vehicle.
- Rebates are available for new leases and purchases.
- Additional fees if you drive over preset mileage limits.
- Allows you to drive more vehicle at a lower monthly cost.
- Own the vehicle.
- Have trade in value on next purchase.
- Possible no downpayment.
- Financing available up to 84 months.
- Low interest rates.
- Normally cheaper than leasing if you purchase the vehicle at the end of the lease.
- Can drive debt free after loan is repaid.
- Rebates are available for purchases and leases.
- Unlimited mileage.
- Loans can be terminated at any time by paying off the loan or selling the vehicle.