Investing in a vehicle is a big decision, regardless of the point in life where you are at. You may feel that the toughest decisions when it comes to buying a car are between the brand, type, and color of the vehicle. Truth is, these are the easier choices to make. The real problem is choosing between financing vs. leasing a vehicle. There are significant costs that you need to consider when it comes to paying for a used or new vehicle.
If you’re dreading the prospect of having to save up for the full price of a vehicle upfront or if having to secure a vehicle loan is particularly daunting, then leasing could be a great option. That being said, leasing cars aren’t for everyone either. What makes one option better than the other? Read on to know the pros and cons of both, financing a vehicle vs. leasing it:
1. Pros of leasing a vehicle
- The monthly payments will be typically less than that of a vehicle loan.
- Under the leasing option, it is easier to be driving a new car every 2-3 years.
- Those who lease cars are almost always protected by a warranty.
- Those who lease cars do not have to worry about selling or trading the car later on.
2. Cons of leasing a vehicle
- Those who plan on leasing vehicles should have a stable source of income.
- Those who are leasing vehicles can only drive a specific number of miles throughout the term of their lease. If they cross the specified number, they are charged a penalty or have to pay extra per mile, as agreed upon by the dealer.
- Those who lease vehicles have to properly and consistently maintain their car.
- In most cases, leasing a car means one will have to purchase gap insurance.
- Those who lease cars could end up paying more in the long term than they would if they would have purchased the vehicle.
Now let us have a look at the pros and cons of buying a vehicle.
1. Pros of buying a vehicle
- Buyers of vehicles will have ownership of the car chosen.
- Buyers of vehicles can drive as many miles as they like without worrying about limits.
- Buyers of vehicles can customize it any way that they like.
- Buyers can build up the trade-in or resale value of their vehicles.
- Buyers of vehicles have the option of driving their car for years for spreading out the cost and recovering maximum value from the vehicle.
- Buyers of vehicles face no risks of any possible lease-end charges.
2. Cons of buying a vehicle
- Buyers of vehicles will face higher monthly payments as opposed to lease payments.
- Buyers of vehicles will have unexpected repair costs after their warranty period expires.
- Buyers of vehicles are responsible for selling or trading their used cars if they end up wanting to get a different one.
In the end, one needs to consider all of the above before they are sure about the merits and demerits of financing vs. leasing a vehicle. Factors such as income, use and purpose of the car, need for customization, and possible post-warranty costs need to be taken into account before one decides to buy or lease a vehicle.