Saturday, February 14, 2009

Just three questions to ask on car leasing vs. buying

1. Have you crunched the numbers?

Not sure whether you want to commit to the car for a long term? Break out the calculator. Use BankingMyWay's (Mainstreet's partner site) lease vs. buy calculator to crunch the numbers for you. If keeping your monthly payments down is most important to you, know that the short-term monthly cost of leasing is usually less than the cost of buying. (On average, monthly lease payments are 30% to 60% lower than loan payments for the same car, same down payment, etc.). This holds true even when compared to 0% or low-interest loans. Plus, in an ownership arrangement, auto dealers will likely require more money down than with a lease deal.

2. How important is ownership to you?

When you buy a new car, you pay for everything, including its upfront value, plus finance charges, plus fees. In return you get equity, which is essentially the car’s resale value, or what you can expect to get back if you sell it or trade it in. And when you finish making payments, you’ll be free and clear. But is a long-term equity deal a good one? After all, the longer you own and drive a vehicle, the less equity you have. When you’re leasing, you’re only buying the time you will use the car, meaning the amount it will depreciate in the time that you drive it. That keeps monthly payments down, but leaves you with no equity at the end of your contract.

3. What about repairs?

When you lease a car, you’re not really the owner. But when it comes to car maintenance and repairs, not being the owner can be a good thing. By and large, any type of repair will be covered under your manufacturer's warranty. (And your car’s always almost brand new, so the risk of something going really wrong is rather low.) Car owners, on the other hand, have a vested interest in car care and maintenance. That can include keeping on top of oil changes and brake pads replacements as well as keeping the body scratch- and dent-free. Leasers as a rule find themselves less concerned with the details, since it’s not going to be their problem down the road.

Also, when leasing, be aware of additional fees (including security deposits and any lease-end charges) so they don’t take you by surprise. Expect to make your first monthly payment when you sign your contract.

When it comes to buying or leasing a car, there is no right answer. Buying and leasing both have their pros and cons, so the key is to look hard at your own situation and preferences before you sign a contract.

7 comments:

herbal medicine said...

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Continue

car leasing.co.uk said...

Truly there are a lot of benefits you can get in leasing a car instead of buying your own. You can get the type that you need as well as the model without having to worry about too much expenses in keeping it forever.

magi said...

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Buy Extenze said...

This is really a fascinating blog, lots of stuff that I can get into. One thing I just want to say is that your Blog is so perfect!

Unknown said...

There is indeed no right or wrong answer in buying or leasing a car. It just asks what is advantageous for you. Leasing a car will of course free you from maintenance and repairs, as well as the hassle of reselling the vehicle, since it is harder to resell a car as it depreciates. Leasing will save you money and time for yourself, which, when put to good use, can have potentially productive outcomes.

- Nettie Christensen

Unknown said...

I agree with Nettie that there is no right or wrong choice in buying or leasing a car. One pro of buying a car is, of course, ownership. It doesn’t necessarily have to be brand new, just that it fits in the budget, and once it is paid off, you own it.

Kyle Schmidt

Clint Moore said...

There are pros and cons to both leasing and buying a new car. I personally prefer buying one since it allows me to have full ownership of the vehicle. Saving for and buying a new car is quite a fulfillment. I can also do modifications on it when it’s mine, and I can put whatever accessories I want in it. This leads to a more personalized vehicle, one which I can feel responsible with.

Clint Moore