Leasing is growing in popularity, and represents a viable alternative to buying.
Why? Because it costs less. You’re basically paying for the estimated depreciation of the vehicle over the lease period, rather than paying for the whole value of the car. Of course, all you’re getting is the use of the car during that period, rather than actual ownership of it in the end.
Here is a quick rundown of some advantages and disadvantages to leasing rather than buying:
- A lease costs less than a purchase, you only pay a portion of the vehicles cost
- Monthly payments are lower
- No large down payment. When the lease begins, you pay the first month’s payment, title, taxes, registration, banking fees, and a security deposit.
- You don’t have to worry about selling the car when you no longer want it.
- You don’t own the car.
- You aren’t able to customize the vehicle or make modifications to it as you could if you bought it.
- There are additional charges for excessive mileage (for example, more than 15,000 miles a year) and any damage to the car.
- Generally, you will need to have the maximum insurance coverage limits.
The decision to lease or buy will always depend on your personal circumstances. If your objective is to one day be rid of car payments and you want to own, buying a car may be the best option. If, however, if your goal is to drive a new set of wheels every four years and minimize your monthly costs, leasing a car may be a good alternative.