When you need a new car and you don’t have a bankroll of cash, you could be faced with the choice to buy or lease a vehicle. Which option is better for you?
Both options have their ups and downs. According to an article on Edmunds.com, “Should You Lease or Buy Your Car?” most people will tell you that financing is better. Financing usually involves more up-front cash for a downpayment and higher monthly payments, along with additional repair costs once the car’s warranty expires. However, once you finish paying off your car loan, you could drive payment-free for a few years, which can save you money.
When you buy a car, you can change it however you prefer. You’ll have no mileage limits like you would in a lease situation. If your needs change, you can sell or trade in the car whenever you want.
On the other hand, leasing a car involves lower monthly payments and doesn’t require as much cash up front. You’ll also avoid repair expenses because the vehicle is covered by the factory warranty. Leasing also provides the opportunity to drive a new car every few years.
According to the Edmunds.com article, leasing a car can also be advantageous for those who use their vehicles for business. Leasing can enable you to have a nicer car for a lower monthly payment. If the car is for business use, you might be able to write off some of your lease payments. You’ll also pay less sales tax on a lease option. At the end of your lease, you don’t have to decide whether to sell or trade in the vehicle.
However, leasing has its downsides too. You don’t own the car at the end of your lease, although there is usually a purchase option. There are also additional charges for exceeding mileage limits or for excessive wear-and-tear on the car. You’ll need to decide which option is better for your individual situation.
If your credit isn’t the best, check out Earnhardt Auto Center’s Mr. Ed finance department. Life happens, and this department works with those who have less-than-good credit to obtain auto financing.