Lease or Buy?

Throughout most of the year there are usually numerous advertisements touting the benefits of leasing a vehicle instead of buying it outright. These kind of advertisements can be particularly attractive if you are shopping on a budget because they will allow you to get into a more expensive car for less money. Whereas you might would have previously been only able to afford a base model vehicle with a lease agreement you may be able to take advantage of options for the same price as the base model. If you are considering whether a lease agreement may be right for you be sure to take into consideration all the details regarding the differences between leasing and buying outright.

The first factor that should be taken into consideration is whether there is an assumed down payment in that lease advertisement. Even thought it is really a lease, you may still be required to make a minimum down payment in order to get the same terms as are advertised. It is not uncommon for that assumed down payment to fall in the range of $4000 and $5000. If that’s more than you had planned to put down on your car purchase you may be in for a bit of a surprise.

You should also give some thought to how many miles you plan to drive per year. Why is this important? Quite simply because most lease agreements come with a maximum mileage per year cap. This means that in the event you drive more miles per year than the cap, at the end of the lease term you could end up being penalized. While the average person drives at least 15,000 miles per year, the most common mileage cap on a lease agreement is somewhere around 10,000 miles. If you think you might rack up more miles per year than that, you may be facing a severe penalty at the end of the lease term.

It’s also a good idea to make sure you know which model is included in the lease offer. Many times, the offer made in the advertisement is only for a specific model. Generally, the offer will be for a base model with a manual transmission. If you’re fine with no luxury options and no automatic transmission that works out well for you. On the other hand, if you prefer something else, be prepared to pay more than the advertised price in the lease offer.

You should also consider whether it’s really better financially for you to lease or buy your next car outright. There are certainly some financial advantages to leasing such as the fact that you can obtain lower payments than buying outright. On the other hand; however, to see the full picture you should think about how long you plan to keep the car because this can impact whether it’s really such a good deal or not. If you generally like to trade in your vehicle once every year or two so that you can always drive a new vehicle, a lease offer may be a great deal over time. On the other hand, if you prefer to keep a car for awhile it may not be such a great deal.

It is also important to note that with a lease agreement you lose the right to have any modifications to the car made including any changes to the bodywork and audio. Give this careful thought and consideration before you sign on the dotted line of a lease agreement.

By taking these guidelines into mind you can make the best decision regarding whether leasing or buying outright is best for you.