Getting a car is a hard decision. There is a lot to think about. Lease vs car loan, let’s determine your needs and decide which choice best suits your lifestyle.
Money isn’t the only factor you should take into consideration. Your personal lifestyle plays a big role in whether you decide to buy or lease a vehicle.
I’ll give you the major pros and cons for each side of the lease vs. car loan. So, you’ll be able to decide which option is right for you.
The difference between: lease vs car loan
Leasing a car is like renting a car. You’ll still have to make monthly payments.You can keep driving the car for as long as the lease is active.
A car lease is a contract in which one party permits another party to a vehicle for a specified period of time in exchange for monthly payments.
Lower monthly payments.
The cost to lease a car is much lower than to buy one. Little or no down payment is required, and you don’t have to pay any upfront sales tax.
Mechanical failures are covered
You never have to worry about mechanical failures. If you’re covered by a manufacturer warranty during your lease term, you never have to worry about your repair bill.
However, you are still responsible for regular maintenance.
You are required to pay a minimum amount of auto insurance. The amount depends on the state where you live.
You get to drive luxury and always new car.
If you lease a new vehicle every few years, you will always have the benefit of driving a car with the most up-to-date technology, comfort, and safety features.
Drivers can lease a vehicle that is better and more expensive than the one they couldn’t afford to purchase.
Leases usually run for two to four years, and when they expire, you are eligible to sign a lease on a new car.
However, when you have a lease, it is harder to get out of the contract than it might be to sell a used vehicle.
If you need to get out of a lease before it expires, you may be stuck with thousands of dollars in early termination fees and penalties.
Those charges could equal the amount of the lease for its entire term.
Car leases typically have a stated maximum number of miles that the leasee can drive the vehicle per year, known as the mileage allowance.
The standard mileage allowance for a private driver lease normally ranges from 10,000 to 15,000 miles per year.
If a driver exceeds the mileage allowance, they’ll be charged an additional fee per mile.
Every lease have mileage limits where you’re penalized if you drive over that set amount. these penalties can range from five to 20 cents a mile.
It’s important to determine ahead of time how you’ll use the car. Will it be for short- or long-distance driving and what those mileage limits are.
Here are some of the unique fees you may have to pay if you choose to lease a car.
- Acquisition fee — This covers the leasing company’s administrative costs for arranging the lease.
- Security deposit — This might be roughly equal to one month’s lease payment.
- Early termination fee — You might be charged this fee if you end the lease contract early.
- Disposition fee — This covers the leasing company’s costs for cleaning and selling the car at the end of the lease
Buying a Car: Pros and Cons
You get to own your own car
The difference between leasing a car and buying a car is that, you are purchasing the vehicle.
You will still make monthly payments. Once you fully pay off your auto loan, the car is yours.
You can do whatever you want with your car. If you want you can customize it as you like, even change a color.
You’re free to sell it, trade it or keep driving it. You can also drive as many miles as you want without worrying about penalties.
So let’s take a look at the summary of pros and cons of lease vs car loan:
- Having lower monthly payments.
- Driving luxury cars for less money.
- Having lower repair costs because you are under the vehicle’s included factory warranty.
- Easily change a new car every two or three years.
- Paying less sales tax.
- You don’t own the car at the end of the lease (although there is always the option to buy).
- Your mileage is typically limited to 12,000 miles a year (but you can still buy extra miles).
- You’ll pay more in the long run for a leased car than you will if you buy a car and keep it for years.
- There is a chance you could face excessive wear-and-tear charges.
- Customize your car as you please.
- Save money over the long term if you buy a car.
- You can drive as much as you like. There’s no excess mileage penalty.
- Having more flexibility since you can sell the car whenever you want
- You have to pay a higher down payment to avoid being upside down in the loan (owing more than the car is worth).
- Your monthly car payments are higher than lease payments.
- You’re responsible for repair costs once the warranty expires.
Should you lease or buy a car?
You should make a decision what is better for you. Whether it is better to buy or lease a car depends on your own lifestyle, driving habits and finances.
Determine how much you drive each month and year to avoid excess mileage penalty.
- Buying may be the better option if you travel a lot, buy.
- Depends on your work place, if your work is far away from home, buy.
- If you prefer to keep one vehicle for long periods of time, buy .
- Is equity and resale value important to you?Then you should definitely buy.
- If you like the change of a new vehicle often, lease.
- For those interested in building credit, buy a car.
Ultimately, the best choice for you depends on your preferences, your budget, your ability to handle the expenses and your daily destination.Follow me on Facebook