Are you shopping for a new car? Perhaps you are wondering if you should lease or buy a vehicle. Purchase and lease loans are two ways you can finance a vehicle. There are advantages and disadvantages for either depending on your situation. When making the decision about leasing a car versus buying, you should consider your budget and how long you plan to drive the car.
Cost Advantages and Disadvantages
When you buy a car, you are purchasing it for the total value. When you are leasing a car you are only paying for the value of the vehicle for the length of time on your lease. The advantages of leasing, in terms of cost, include lower payments for a short period of time. Car payments when purchasing a car are often higher than lease payments and the loan may cover more years. Disadvantages with leasing a car include paying additional fees when you return the vehicle, and losing the car once your payments are completed. When buying a car, you get to keep it after all of the payments are made and you can be debt free until you decide to purchase another one.
Advantages and Disadvantages of Leasing a Car
Leasing a car usually requires that you have a high credit score in order to take advantage of the lower down payment and monthly notes. If you like being able to drive a new vehicle every few years and not have to pay for costly repairs then you may enjoy the advantages of leasing a car. However, with lease vehicles you have to watch your mileage or you will have to pay for any additional miles driven over your limit at the end of the lease. If you decide that you want to keep the vehicle, you can purchase it but the disadvantage is that you will be paying more money for it in the long run if you then finance a purchase loan. You can get your money's worth if you continue to keep the vehicle for more years after all of the loan payments are made.
Advantages and Disadvantages of Buying a Car
If you can afford a higher monthly payment and payment for costly repairs once the warranty expires, you may want to look into buying a car. The advantages include being able to keep the car for as long as you want, and putting as many miles on it as you want without having to worry about mileage limits. Since you are the owner of the car, you can modify it any way you like such as changing the tire rims or having a sunroof built into the roof. The disadvantages are that if you want a different vehicle you will have to trade your car or sell it and, depending on its condition and mileage, the value may be lower.