Leasing Car Versus Buying an Automobile

If you compare the costs of leasing car versus buying, you may find that leasing is cheaper. If you consider that there are substantial penalties on early lease termination or a payment default, there is a potential hidden cost to a lease, along with a definite negative impact on your credit rating. If you are trying to decide between leasing and purchasing, consider your lifestyle. Leasing a car can become very expensive if you pass the limit on mileage or if you use the car heavily, resulting in unusual wear and tear. If you are someone who puts substantial miles on a vehicle and will not be bothered by paying repair bills, you’re someone who should probably purchase the car.  

Leasing Car Versus Buying Tips

Let’s look a little closer at comparing leasing car versus buying an automobile. There’s no right answer. Both options have their own advantages and disadvantages. Your personal and financial situation will be a major factor in the decision.

What can you afford? Are you confident that your employment is stable? All things considered, are you in good financial shape. If you need a lower monthly payment, consider that the monthly lease payment is less than the payment on an auto loan. However, if a sense of ownership is important to you and you do have the cash available to make the required down payment and pay the sales taxes, you should look closely at purchasing a car.

Back to the question of leasing car versus buying. If you find you really need or want a luxury car, but can’t cover the costs of purchasing a car, leasing one may be your only other choice. Again, let’s go back and re-examine what could be high and unexpected costs associated with a lease. If you turn the car in early, miss a payment, exceed the contracted mileage or put excessive wear and tear on the car, you could find yourself facing major financial penalties and putting your credit rating in jeopardy. If you do decide to lease, make sure your budget takes the monthly payment into consideration for the length of the lease.

Of course, there’s still the factor of lifestyle. Do you really want to own the vehicle? Or, are you happier, turning in a vehicle for a new one on a fairly regular basis. How long do you intend to own the car? If you’re going to be keeping the car for several years, you will probably be better off purchasing the car, negotiating for the best possible financial terms. If you’ll be keeping the car for only two or three years, leasing might be a better option.

Then there’s the question of mileage. If you’re going to be driving a car under 12,000 or so miles a year, leasing may be the better way. Most lease contracts do have limited mileage and the contracts contain substantial penalty clauses for over mileage. Where you drive can be important. If you’re in an environment that simply puts a lot of wear and tear on your car (rough roads, cracked windshields, dings in paint and so forth) you may have to reconsider leasing.

All in all, consider the choice between leasing car versus buying carefully. Weigh all the choices and costs and be sure that no matter which way you decide, that you can afford those monthly payments.

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