When deciding whether you should lease or buy a car you need to know your own personality and your ability to follow through if you plan on buying a car. Typically, over time you can save significant amounts of money by buying a car rather than leasing one, but if you are a person who consistently gets a new car every 2, 4, or 5 years, leasing a car is going to be less expensive. Just like any financial decision, you have to look at the long-term projection, not just the now.
Buying a Car
If you are going to the buying route, you need to be looking at a practical car. One that has great ratings and can easily go over 100,000 miles. This is what will make your dollar go further when purchasing a vehicle, because if it can run for a long time with only the standard “upkeep” type maintenance you will keep your overall costs down.
You cannot look to buy something “flashy” if you are looking for a good financial decision. Financially it should be all about dependability, ease of maintenance and an engine that is known to go for the long haul. If you drive an extensive number of miles in one year, buying is definitely the better choice for you as well because there are stringent limits on the number of miles on a leased vehicle. These limits come with stiff penalties should you go over the allotted mileage.
Leasing a Car
Leasing is a great option if you don’t drive a ton and you tend to get a new car every few years. Financially it is always a poor decision to buy out your lease at the end of the period. This is where you will end up paying much more for the car and likely acquire heavy maintenance fees as the car is past its prime. The low monthly rates make this a great decision if you plan to always have a car payment. As long as you have budgeted as such, it should not be a problem. If your financial situation changes you could find yourself in a bit of a pickle.
Conclusion
Overall buying a car is more likely the better option for long-term financial success. You can keep the car, pass it down to others and eventually have no car payment. As for maintenance, if you continue to put some money away every other month you will have the money to fix any problems the car might have and you are still reducing your monthly payments by half.
Another key to buying a car is if you can do any maintenance on your own. You can significantly cut down your spending if you are mechanically inclined. This makes buying even more cost efficient than leasing. Buying a car might cost more at first, but in the end should save you money over leasing every time.
Leasing a car has a lot of agreements involved because you would still continue to have communication with the car dealer. Therefore, you need to make sure that the car advertised is the same one you are offered when you get to the showroom. The details of the lease should be clear understood, including the total price of the car, the limit on yearly or total miles and the balloon payment which is due when the lease ends. If your work job requires you to regularly need a new car, leasing makes it possible to always have a new car at your disposal.
Sam proudly drives his 2000 Honda Civic, which he owns, and despite the car’s age it runs well. He also writes a variety of financial content for ppiclaims.org.uk.