Some people choose to purchase our vehicles and some of us choose to lease them. The question is which is best choice to take, car leasing or car buying?
Look upon a vehicle lease like a long term rental. You do not really own the vehicle and at the end of the lease you will then return it and pay any end of lease cost that is due, to complete your contract.
In contrast when you buy a vehicle and pay for it with a loan, the car remains your property at the end of the loan period. If you then wish to buy a newer car it’s up to you to trade in or sell the old one.
Most new cars will lose their value just as soon as you drive it out of the sale rooms! Obviously it also depreciates with age and as the mileage goes up.
Lease payments will cover just the portion of the cars value that you use during the time you drive it, the depreciation and not its complete cost. Finance charges are added on to your payment.
When buying a vehicle with a loan you are liable to pay back its full cost, plus finance charges. Depending on your deposit or trade in value of another car, this can result in higher payments than for a lease, even if you get a long term loan.
At the end of the lease you may be liable to pay excess mileage fees. A maximum number of miles are generally stipulated that you can drive during the lease period. It is policy that you would repay a charge per mile for every mile driven over that limit. You can often buy extra mileage at the beginning of the contract at a cheaper rate than you would pay for the extra mileage at the end!
As regards damage to the car, the leasing company would naturally expect some of wear and tear. However the car will be inspected for any damage or excessive wear and tear when it is returned at the end of the lease.
A fee would also have to be paid should you choose to end a car or van lease early.
It is a misconception that the car lease firm takes responsibility for the maintenance of the vehicle during the contract period. You will be responsible for the cost of maintaining the car, just as if you owned it.
Warranty on the car will be covered whoever it is owned by. Usually you will find that lease terms end before a vehicle goes out of warranty.
The best way to try to get an idea as to the deal that would suit you best is to work out how much you would actually be prepared to pay to own a vehicle. Add up all the payments you would make on the car and then compare that to the value when the payments cease. Owning a vehicle does not usually make money unless maybe when buying a classic car.
So, is it best to lease or buy?
Leasing:
A car lease might be best if you need a new car every two to three years.
It would be preferable to drive a new car but cannot afford to buy one.
On average you drive 15,000 miles or less each year.
You would not be using the vehicle in such a way that it would cause excessive wear and tear.
You are not in a position to make a large down payment.
You use the vehicle for business and are able to write off your lease expenses.
Buying:
You plan to pay off the car and keep it to avoid loan payments.
You are in a position to pay for repairs after the warranty period has passed
You put more than 15,000 miles a year on a car
You have credit issues and if this is the case it will be easier to buy than to lease
You may intend to exchange it in for another car in less than two years
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