To buy or not to buy, that is the question.
The decision whether to buy or lease a car is one with financial and other ramifications. Cars often account for, next to your home, your largest financial expenditure during your lifetime. They are expensive to buy, operate and maintain, but they are also expensive to lease. Neither decision is without its financial downside.
At the same time, having a car is often a necessity as well as a convenience. If the public transportation system in your area is inadequate to your needs you might need a car to get back and forth to work, for grocery shopping and for other necessary errands.
The following points could help you determine for yourself whether you should buy or lease a car.
Short-term versus Long-term Cost
Leasing provides short-term benefits because your monthly lease payment could be considerably less than a car payment would be. Some people who cannot afford to buy a car at all can afford to lease one. Still others will lease a more expensive car than they could afford to buy.
But, if you purchase a car and keep it longer than the term of the loan, you will be debt-free for as long as you continue to drive it. This is the long-term benefit of buying a car. The long-term cost of buying a car is always less than the cost of leasing if you keep the car after you have paid the loan. If you lease, when the lease term is up and you turn it in you no longer have a car until you buy or lease another one.
Major Repair Costs
A benefit of leasing is that you have constant protection against expensive transmission and engine trouble during the entire period of the lease. A leased car is always under warranty.
Mileage Restrictions and Extra Charges
If you own your car then you can put as much mileage on it as you wish. However there are certain mileage restrictions on leased cars. When you turn the car in at the end of the lease you will have to pay extra charges for exceeding prescribed mileage limits. Also, if you don’t maintain the car in good condition you will be charged for any damage that the leasing company determines to be beyond normal wear and tear.
Gap coverage is designed to fill the gap between the depreciated value of your car and the replacement cost should an accident occur. Most car leases automatically contain this protection.
In addition to the financial considerations you should also consider your own priorities. If you enjoy driving a new car every two or three years and if you prefer a car with the latest technological and safety innovations then leasing could be the right decision for you.