If you’re in the market for a car, you may be asking yourself whether it’s better to buy or lease. There is no one answer to every situation, read below to find out the benefits of each to see which might be best for you.
Buying A Car
The first positive aspect of owning a car is exactly that, you own it. It allows you to have the equity of the car, it is an asset. It even gives you the option of taking out vehicle title loans. If you are in a bind for money, it is a short term loan that uses your car as collateral. Hopefully you won’t be in that situation because another benefit of buying a car is that even if you finance it, eventually you will own it and not have a monthly car payment. Unlike a lease, you will not have any mileage restrictions.
Unfortunately, with buying a car and having equity in it you are subject to market fluctuations. The value of your car could change with time. A lot of times people say a car depreciates the second you drive it off the lot. Another con of buying a car is that a sizable down payment is typically required (unless you want an astronomical monthly payment). You could also pay a large amount in interest because the financing terms are typically long term.
Leasing A Car
The pros of owning a car are simple. You are only paying off the value of the car for the term you have it for so that means your monthly payment is most likely lower than buying a car. Because of that, the down payment amount needed is less as well. The term for leasing a car is typically 3 years so that means that every 3 years you get to have a brand new car with the latest technology.
On the other hand, one downside of a lease is that you do not own the car and you therefore do not have any equity. Also, you are limited in the number of miles you can drive. The number of miles you have to drive are set when you get your car. If you go over those miles, the overage fees can be rather hefty. You also will have to pay for any damages or alterations when you return your car. Normal wear and tear is acceptable, but they will hit you hard for any damages.
Essentially you have to review the pros and cons of each option and see what is best for you and your current situation.