Should you buy or lease?
While a majority of consumers choose to purchase a vehicle by securing a standard auto loan, others prefer the aspect of leasing. In this section, we outline in detail the vehicle leasing process, including some of the advantages and disadvantages associated with various lease programs on the market today. We weigh the positive and negative aspects of buying versus leasing to assist you in making the best car purchasing and owning decision possible.
Advantages of Buying
There are many advantages to purchasing a vehicle. First, you can modify your car in whatever manner you choose, including painting the vehicle and adding any after market accessories you'd like. What's more, some would argue that buying a vehicle versus leasing a vehicle is a more economical avenue from a dollars-and-cents perspective in essence, you may pay less for a vehicle during the lifetime of a loan than you do if you lease multiple vehicles over a cyclical period of years.
To continue, there are no mileage restrictions associated with buying a car like there are when you lease a car. You can drive as many miles as you'd like without ever having to pay penalties in mileage overage costs. Finally, when you purchase a vehicle outright, you have the flexibility of selling the car whenever you want.
Disadvantages of Buying
While there are many advantages associated with buying a car, there are also some disadvantages. If your warranty expires and you experience mechanical problems with the vehicle, you're responsible for the repair costs. As your vehicle gets older, you can expect to incur repair and maintenance costs. What's more, you're responsible for the logistics involved with selling or trading in your car at the end of your loan term.
Finally, unlike standard investments that appreciate over time, cars depreciate in value while depleting your liquid cash in the process.
Advantages of Leasing
For the most part, leasing provides an opportunity for people to drive more expensive vehicles for less money each month. Additionally, leasing allows consumers to drive a new vehicle every few years depending on the length of the lease program. Moreover, most leased vehicles are comprehensively covered under a manufacturer's warranty during the length of the lease, allowing consumers to own a more expensive vehicle without the worry of large maintenance and repair bills.
Finally, unlike owning a vehicle outright at the end of a standard automotive loan, leasing helps consumers avoid the hassles often associated with selling their used car to an independent third party or trading in their vehicle to a local dealer. Instead, you simply turn in your vehicle at the end of the lease term and begin a new lease on a new vehicle, if that's the route you choose to take. It's a simple method some consumers find more attractive than the traditional used car sales or trade-in process.
Disadvantages of Leasing
To begin, most vehicle leasing programs have a yearly mileage limit. This means that you can only drive your vehicle a certain amount of miles every year without paying a penalty at the end of the lease term. Obviously, these mileage limitations wouldn't work for someone who drives their car long distances on a frequent basis or someone who doesn't want to be limited to the amount of miles they drive in any given month during any given year.
Another disadvantage to leasing is that at the end of the lease term, you don't own the vehicle. For some people, this is OK. For others, it doesn't make sense to make monthly payments for two, three or four years for a car they may never own.