This is one classic scenario that haunts ever car consumer out there: Pay cash upfront or settle for monthly payments? Will you be buying or leasing for a new set of wheels?
As is the case with every other common dilemma, there is no slam-dunk answer. Each option has its own benefits and drawbacks, and it all depends on a set of financial and personal considerations.
First, check your finances. It is important that you are able to afford the vehicle. Ask yourself, how stable your job is and how healthy you are financially. The short term monthly cost of leasing is definitely lower than making monthly payments on buying: you essentially pay only the portion of the car that you use up upon the time that you actually drive it.
If you have a lot of cash upfront, then you can opt to pay the down payment, sales taxes – in cash or rolled into a loan – and the interest rate determined by your loan company. Buying effectively gives you ownership of the car and that feeling of “free driving” that goes on providing transportation.
Unlike buying, it gives you the option of nothaving to fork out the down payment upfront, leaving you to pay a lower money factor that is generally
payments will result in stiff financial penalties and can ruin your credit. You need to make sure you carve out the monthly lease payment in your budget for the foreseeable future, at least for the duration of the lease.
Other than the financial aspect, when buying or leasing a vehicle, a primary consideration is your lifestyle and preference. Think about what he vehicle would mean to you: are you sentimental about having a car or is this something to satisfy your craving for a new vehicle?
If you want to drive a car for more than fives years, negotiate carefully and buy the car you like. If, on the other hand, you don’t like the idea of ownership and prefer to drive a new car every two to three years then you should lease.
Next, take into consideration your transportation needs: How many miles do you drive per year? How well do you drive and maintain your vehicles? If your answer becomes: “I drive 40,000 miles a year and I don’t really care much about my cars as I don’t mind dealing with repair bills,” you are better off buying a vehicle.
Leasing is based on the assumption of limited-mileage, usually no more than 12,000 to 15,000 miles a year, and wear-and-tear considerations.
Unless you can stick to the given mileage and keep the car well maintained at the end of your lease contract, you might just get hefty fines at the end of your lease agreement.
