Financing v. Leasing a Car
Thinking about getting a new car, but not sure whether to buy or lease? The answer to that question depends on the shopper. What the shopper’s needs, wants and financial goals are all factors that will help one decide which option is best for them. Both methods include unique advantages and disadvantages and these factors can change based on one’s financial circumstances.
- Depending on the car, monthly payments and the down payment can be more affordable.
- Most leased cars are covered by a factory warranty, so there’s less of a chance for unexpected repair costs. Lease terms (39 or 48 months) can sometimes exceed the factory warranty, so be sure to determine if your car will be covered by the factory warranty the entire time it is leased.
- Lessees drive a new car every few years.
- Leasing a car typically requires a better credit score than needed for financing a car.
- The car does not belong to the lessee, therefore a lessee has to take extra good care of it.
- The car does not belong to the lessee, therefore a lessee cannot modify the car in any way.
- Auto insurance is typically higher on a lease since the leasing company requires a certain amount of coverage for the vehicle.
- Lessees can only drive a set amount of miles per year and if you exceed the allowed annual mileage lessees can incur an expensive fee.
- A lease payment can not be refinanced, but a car loan can. Refinancing a car loan can decrease a monthly car payment and interest rate.
- A car buyer can drive as many miles per year as they like. There’s no restrictions to how far a buyer can travel.
- Buyer can sell or trade in the car whenever they want.
- The car belongs to the buyer, therefore a buyer can modify the car in any way to make it customized to their liking.
- There can be higher monthly payments and a larger down payment.
- Once the vehicle’s warranty expires, the buyer is responsible for maintenance costs.
- Trade-ins or selling can tend to be a hassle and a complicated process.
Basically, choosing whether to buy or lease a car depends on how much you will be driving and where you will be driving, how much cash you have ready for down payments and monthly payments, and whether or not you like having cars for long term or short term purposes.
If you are looking to spend less money in the moment, you don’t drive over 15,000 miles a year, and you like to have the newest car, than leasing might be a great option for you. But, if you drive a lot, you can afford higher payments, and you are the type to ride a car out for a long time, then buying or financing a car could be the right choice for you.
Discuss the options with a sales associate at Kendall Dodge Chrysler Jeep Ram, and find out if leasing or financing a car is good for you.