Purchasing a vehicle can be a very stressful process due to the amount of money at stake and the importance of the decisions you have to make. One decision that can complicate this process is leasing vs. buying a car.
Leasing can have lower upfront and monthly costs, but it’s not the best choice for everyone. We’ve compiled some helpful advice to help you figure out if leasing or buying a car is right for you.
What’s The Main Difference Between Leasing And Buying?
The main difference comes down to ownership. Leasing a car is a similar concept to renting an apartment. You pay each month to use the car, and at the end of the term, you have to return the vehicle. Buying a car, on the other hand, means that at the end of all of the payments, the car will be yours.
Factors For Deciding On Leasing vs. Buying A Car
Here are some of the most important factors to consider when you’re weighing the options of leasing or buying a car.
Consider how much you want to spend
Buying a car requires that you can pay in full for the value of the car, either upfront or via financing.
Financing a car means that you will take out a loan from a financial institution to pay for the car, and then pay back the lender with interest over the term of the loan. It’s important to consider, though, that at the end of the loan term, you will own the car. This means that after a certain point, you’ll no longer have to pay car payments. In the long-term, this can make buying a car a better deal.
With leasing, you typically have lower monthly payments and no required down payment. However, when the lease is up, to still have a car, you will either have to renew your lease with a new vehicle, buy a different car, or negotiate a lease buyout.
A lease buyout is when you purchase the car you have leased once your contract is up. Sometimes a lease buyout can save you money, but it may require an additional fee – be sure to consider the terms of a lease buyout before you sign a contract if you think you may end up selecting this option. It’s important to watch out for any fees hidden in purchasing a car- these are common with leasing contracts.
Factor in maintenance costs
Many leases typically cover the cost of maintenance and repair. This can save you over a thousand dollars a year! Be sure to check the terms and conditions of your lease to see who will be responsible for these costs.
Consider how long you want to own the car
Leasing a car is a great option for anyone who wants to own a new car every two to three years. At the end of every leasing period, you can return the car and opt for a new lease with a brand-new vehicle. So, you will save yourself the hassle and worries that come along with an aging vehicle.
If you know for a fact that you will need a vehicle for the foreseeable future, buying a car might be a better economic option for you. If you buy the car, once you are done using it, you have the freedom to sell it and make back a portion of your investment.
Consider how much you drive
Leasing contracts typically include mileage limits. This means that you can only drive the miles listed in your contract before you have to pay overage fees. If you only drive ten minutes to work and back, this can be a great option for you.
On the other hand, if you are someone who loves road-trips, drives for work, or lives far away from your office, leasing might cause you to rack up extra mileage fees every month, negating the savings you are getting in the first place.
Consider what kind of car you want to drive
Having a beautiful, luxury vehicle is a dream. It can elevate your style, comfort, and confidence. If you have expensive taste in cars, but can’t afford to purchase your dream car outright, leasing might be a better option for you. Often, because leases are cheaper per month, you can afford a nicer vehicle on a lease than you could if you had to take out a loan.
Do you want to customize your vehicle?
Many car owners like to bring their own unique style to their vehicle – whether that be through a new stereo, changing the look of the interior, or other cosmetic upgrades!
If you choose to lease a vehicle, you are typically not allowed to make any customizations or changes to the vehicle. This can cause major issues with your leasing contract. However, if you buy a car, as long as you are not voiding the warranty, you are free to upgrade, change, and tweak the car to your liking.
Leasing vs. Buying A Car: Weigh Your Options
One of the best things you can do before you decide is to weigh the total and monthly costs of each option.
You can start by looking at the loan options that Baton Rouge Telco has to offer and use our auto loan calculators to determine how much you’ll pay each month. And if you decide to lease, we offer lease buyout loan options to help get you to car ownership.