6 Questions To Help You Decide To Lease Or Buy A Car
Plenty of factors are worth considering when leasing or buying a car. Aside from the financial repercussions, it’s important to think about your lifestyle.
1. What’s Your Monthly Budget For A Car?
Leasing a car may look cheaper on the surface because of the lower monthly payments. You’re only paying for finance charges, taxes and the vehicle’s depreciation for the term of your lease. When buying a car, you’re paying the principal and interest for your loan, typically along with an upfront down payment. However, you’ll generally end up paying more for a lease since you’ll be driving a new vehicle and paying a higher rate of depreciation.
2. How Long Are You Comfortable Making Car Payments?
Monthly payments on a lease never stop for the duration of your lease term. With a car purchase, however, you won’t have any monthly payments once you pay off the loan. This can free up funds you were using for car payments, allowing you to allocate this money toward other financial goals.
3. What’s Your Weekly Commute Like?
If you drive a significant distance, it may be better to purchase a vehicle because leases limit the mileage you can rack up on the car. Typically, a standard contract allows you to drive up to 36,000 miles for a 3-year lease, or 12,000 miles per year. If you exceed that amount, you’ll need to pay for each mile once your lease ends. It can end up costing quite a bit if you drive much more than your allotted mileage.
4. Do You Want To Have The Newest Car Model Available?
If you want the latest model, leasing a vehicle may make the most sense for you and allow for lower monthly payments. That said, too many new cars in too short of a time frame can end up costing you more money than a purchase – especially if you choose to break one lease or multiple leases and pay the associated fees.
5. Do You Keep Your Car Clean?
It’s normal for a car to get messy, especially if you have children. While leasing gives you some wiggle room with regard to your car’s overall condition, dealers expect you to return the car in good condition. You’ll need to ensure your car is clean to avoid paying extra fees.
6. Are You Considering An Electric Vehicle (EV)?
Some experts believe leasing an EV can be a smart play for a few reasons. First, the technology is changing rapidly – the EV you buy today could be outdated before you pay the loan off, as charging standards and range improve. Also, leased vehicles built outside of North America may be eligible for tax incentives that aren’t available when purchasing the same vehicle.
