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You’ve researched different vehicles, gone for a test drive, and finally found the next vehicle that’s perfect for you. Now you think you’re done making decisions, but you’re not. You still have one important question you need to answer: are you going to lease or buy? If you’re not sure what the difference is and which one is best for you, read on to learn more about each option.
Advantages of Leasing a Car
Car leasing was once only an option for people interested in a luxury car or businesses. However, it’s now an option that has been growing in popularity over the years. In fact, around one-third of buyers now choose to lease their new car.
When you lease a car, you don’t pay for the entire car. Instead, you pay for fees, interest, and the depreciation that will occur over the term of the lease. Therefore, the monthly payments for a leased vehicle are typically less expensive than monthly payments on a car loan. It’s also easier to get a new vehicle every few years when you lease.
Disadvantages of Leasing a Car
Of course, leasing does have some disadvantages you have to consider. When you lease your vehicle, you don’t actually own it. Therefore, leasing is a lot like renting an apartment as opposed to buying a house. You can’t customize your vehicle, and you’re responsible for repairing any damage that’s beyond normal wear and tear. Most leases also come with strict mileage limits. If you go over those limits, the fines can range from 15 to over 30 cents a mile, which adds up quickly.
Advantages of Buying a Car
Buying a car the traditional way of financing much of the purchase price is still the more popular option for most buyers. If you think you’re interested in buying your car, you’ll enjoy several different advantages. First, you own the vehicle outright. This means you can customize it with any paint color and aftermarket accessories you want. You’re also free to drive it as much as you want.
When your loan is paid off, you no longer have to make any additional payments. Plus, when you’re ready to get your next vehicle, you can get cash for your old car that you can put toward the cost of your new vehicle.
Disadvantages of Buying a Car
Just like leasing has some disadvantages, buying also has some downsides you need to keep in mind when you’re trying to decide which option is right for you. Buying a car is more expensive in the short term. Unless you can make a large down payment, your car payments will likely be higher than a lease payment. You also have to pay interest on your entire loan balance. Plus, there’s a good chance any warranty you have on your vehicle will expire before you decide to sell it.
Now that you understand the differences between buying and leasing, you should have a better idea of which option will work best for you when you’re ready to get your next vehicle.
Image via Flickr by State Farm
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