My Rosy is about to die on me. In case you are wondering, Rosy is my beat-up beetle that I have been driving around for over six years. We have been trough some great times but lately, it has been given me so much trouble and at the most inappropriate time. In fact, last week I missed a very important meeting because I was two hours late. The boss was not happy.
I finally decided that its time I got a new car. Easy to say, right?But the problem here was my budget. In fact, the real problem was that I couldn’t decide whether to buy a car or lease one. You see, buying and leasing are equally good options. It all depends on how much you are willing to spend and what will be your experience with the car in the future. Some people like to change their cars regularly because let’s face it; there’s always something better with higher specs.
For me, leasing is living like a nomad: you get a car, which is never truly completely yours and you have to be extra careful. Whereas, as in the case of a car, you are the king and the queen. Alright, enough with the metaphors! Let’s get down to business.
Following are the pros and cons of leasing vs. buying a car:
It’s quite simple: When you buy a car, you own it. There will come a time when you will no longer have to make any car payments. There’s no fixed ownership period that will restrict you. You do not have to pay large insurance sums on the policy. In addition, you can rack up as many miles you want. If you want to contact a Dodge dealer in Edmonton, call them on Sales: 780-435-3611 | Service: 780-435-9500
No Monthly Bills
Once you have paid off your auto loan, you are the owner of your car. You will not have to micro-manage your budget to separate a hefty amount for the car. As soon as the last dollar of the auto loan is paid, you are free.
Admit it, we all have commitment phobia. As soon as we hear talks about a lease or anything to do with paperwork, our initial excitement vanishes. This is when we doubt our decision and mostly back out at the end. So, if you are one of these people, then it’s better for you to buy a car. Once the auto loan is paid, you are free to do whatever you want to do with the car. You can sell it, trade or even rent it to your friends.
Overall Cost Is Low
The biggest benefit of buying a car is that the overall cost is low. The more repayments you become, the more your car’s equity will build. It may seem that you are paying too much upfront but the overall cost will be much lower than that of leasing a car.
The day you drive your car out of the showroom, you are free to drive as much as miles as you want. This is not possible when you are leasing a car.
Bigger Upfront Payment
Since, you are investing in buying a car, most showrooms ask for an upfront payment from 20 to 25% of the original cost. Some people are not able to provide this payment, which is the reason why they choose leasing.
Low Car Value
One of the biggest drawbacks of buying a car is that say you bought your car in $20,000. The moment you drive off with it from the showroom, its value depreciates. Now, even if you try to sell it back after a week or a month, you won’t get the same price.
Leasing a car depends on just the paper work. You sign and the car is yours for a limited amount of time. It’s quite simple: The finance company gives the dealership a certain amount say $30,000 under which you bought the car. Now the rule of leasing is that you will not be paying the entire $30,000 but the depreciation of the car over the months.
Small or No Upfront Payment
Since you are leasing a car for a certain amount of period, no upfront payment is required. Some showrooms might ask for a small upfront payment mostly because they are keeimage: Pixabayping it as collateral in case of a fender bender.
Perhaps this is the biggest benefit that appeals to most car aficionados. When you are leasing a car, you have the opportunity to set the time period on the contract. When that time period finishes, you can trade in the car for a new model under a new contract.
If you are using the car for business purposes, you have the opportunity to get tax breaks on the mileage covered.
Penalties on Extra Miles Covered
With leasing the car, comes the responsibility of driving within the limit. If the pre-discussed miles limit is exceeded, the showroom will charge you a penalty. Same goes for any repairs and damages.
Early Termination Costs
If you terminate the contract before the lease is over, not only will you have to pay more on the overall cost, you will also have to pay a penalty, which will ultimately prove too costly.
One of the biggest drawbacks is that most showrooms trick people into signing contracts that list incentives such as free car wash, polish or service of any type. What you don’t understand is that these services have hidden charges that are combined with the final payment. Most people prefer buying over leasing because they cannot understand the contract and how they will have to operate under it.
For-Life Monthly Bills
It’s a never ending cycle of making monthly bills that will soon empty your pockets. The more cars you change, the more these bills will be stretched over the months.
Where leasing gives you ease on paying less monthly bills and driving a new car every year, buying gives you the opportunity to permanently own a car. It all depends on how much money you can spare at a time. Both options hold potential and benefits you in different ways.