Credit: www.businessinsider.comWhile the there are many reasons as to why you should opt between buying or leasing a car, the most fundamental reason has to do with finances. There are times when you can just afford to buy a new or second-hand one and the only option left is to lease one.
On the other hand, you may consider buying a car if you feel that the long run costs of leasing it are difficult to maintain. Either decision has its advantages and disadvantages as outlined below.
Advantages of Leasing a Car
Affordable Monthly Installments… The amount of money paid to leasing companies is most of the time negligible and highly affordable. You can even negotiate the rates depending on the model you are leasing. Whichever way you look at it, you will spend less on monthly installments if you lease the car than if you would buy one.
Affordable Initial Down Payment… Before you even contemplate on whether you should buy or lease, you need to compare the initial down payment for both. Most of the times, the first amount you will pay for hiring a car is lesser than buying unless of course you are leasing an expensive model.
No Selling Hassles… After you’re done using a car, you don’t have to worry about selling it, all you have to do is return it irrespective of how long you have used it.
Cheap to Maintain… Most companies lease cars that are relatively new. Newer cars are cheaper to maintain compared to used car. Some people would prefer to lease a car instead of buying a used car that will be problematic to maintain.
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Disadvantages of Leasing a Car
High Insurance Rates… Cars being used for lease attract higher insurance rates. Besides being insured comprehensively, they are also covered separately for theft, riot, and other risks. While the leasing company pays for the basic insurance costs, you may have to pay for the extra risks.
Capped Mileage…The leasing company is well aware that you might be tempted to use the vehicle beyond the stipulated terms. In order to reduce tear and wear, they will put a limit on the mileage. When the mileage is surpassed, you will have pay additional fees.
Continues Payments… You should be well aware that leasing comes with one distinct difference from buying. You never stop making payments as long as you are using the car. This can be detrimental if you are planning to use the vehicle for a long time.
While the above points will help you decide if you want to buy or lease the car, they only represent on side of the story. There are many advantages that come with owning a car but at the same time, there are disadvantages as outlined below.
Advantages of Buying a Car
Convenience… You do not have to deal with some inconveniences that come with leasing. You can drive the car whenever and wherever you want without having to worry about the mileage covered. In addition, you don’t have to deal with tracking system like the ones mounted on leased units so you will enjoy your privacy. In other words, no one will keep tracking your every move to ensure the car is not lost.
Ownership… The sense of ownership that comes with a motor vehicle is gratifying to say the least. Irrespective of whether you buy a new or second-hand one, the fact that cannot be denied is that you own it. Owning a car shields you away from having to answer questions now and then from leasing companies on the car’s condition.
Selling the Car… As long as the unit is registered under your name, you can sell it whenever you want. That is not the case with a leased car. All you have to do is advertise the car, give a quotation, and you are good to go.
You Will Save Money in the Long Run… One of the main disadvantages of leasing is like sighted earlier is the never-ending payments. While you may still pay a new car in installments, you won’t do it for long. This makes buying a car economical in the long run even when you consider maintenance and operational costs.
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Disadvantages of Buying a Car
Difficulties When Selling … Not all cars will sell as fast as you think. Before you buy ask yourself, should I buy a new or used car? This all important question will come into play when you intend to sell it. If you are planning to use the car for long, then a buying a new car would be the best option. If you are not planning to stay with it for long, go for a used one. New or used, buy a car that has a high resale value if you are planning to sell it at some point.
Limited Warranty… It true that most new cars have a warranty. However, once the warranty period expires, you will be responsible for the maintenance costs. While this is common knowledge, you may be caught off guard when the warranty period expires, so you need to plan ahead.
Fast Depreciation… One of the primary reasons why people lease to own is the high depreciation that comes with new cars. A new vehicle will lose almost its half value by the third year of use. Quite a good number of people lease a car, use it for a while then offer to buy it from leasing companies. That way, they end up buying the same car they have been used to at a cheaper price.
Whether to buy or lease a car is purely a question of personal preference. You have to go with the choice that works for you in terms of convenience and affordability. Like always, ensure you are dealing with licensed dealers whether you are buying or leasing a car. The last thing you want to do is invest your money with unscrupulous dealers only to lose it in the end. When leasing, read the fine prints and ensure you understand what the entire contract entails before signing it.