Buying vs Leasing a Car
Now that we have the option of leasing new cars and there’ll soon be new regulations placed on buying new cars, it makes sense for people to be weighing up the pros and cons. Is it really worth buying a new car when you can lease instead? Which makes more financial sense? It’s important to do your research before going ahead with any kind of big financial commitment, so here’s what you need to know.
Many people take out finance agreements when buying a new car. Even if you search for your own loan rather than taking out an agreement with the lenders at the car company, you’ll often end up paying a hefty interest rate. In most cases, it works out far cheaper to lease a car and pay monthly installments for an agreed amount of time, rather than take out a loan you’ll have to repay, no matter what happens to the car. Because leasing is still a relatively new concept, you may also benefit from deals for cars on a lease. Do the math and figure out which option is cheaper for you.
Car sales garages will often ask for a down payment on a new car. Whether it’s a deposit to take the car off sale while you figure out your finance options, or a percentage towards the payment of the car, you may need to have some savings set aside to buy a new car. However, when you lease a car, you’re very rarely asked to make a down payment, and if you are, it can usually be wavered by the leasing manager. Therefore, you don’t have to have a huge savings pot to lease the car you want.
When you buy a new car, the mileage you do in any given week isn’t something you necessarily have to think about too much. It’s your car and you can drive it as much or as little as you like. However, when leasing a car, the mileage you do is all part of the leasing package. You’ll have to agree on how many miles you’ll drive per annum and you may be charged extra for any additional miles you do. After all, the leasing company expects the car back in a certain condition. Although you may have to deal with additional expenses for mileage on a lease car, you’d also have to deal with getting less for your bought car if you sold it with a high mileage in the future.
The Condition of the Car
If you’re notorious for causing scratches or your children like to make a mess in the car, you may want to think twice about leasing. When you sign your agreement, you may have to consent to wear and tear fees, which are likely to happen during the time you drive the car, even if you’re the most cautious driver to ever live. The good news is, some leasing companies put a cap on how much you pay in wear and tear fees.
Which will you choose?