Why Buying a Car is Smarter Than Leasing
For many, the monthly payment is the most important factor when choosing between leasing and buying a car. However, there are other factors that you should consider when making your decision. This article will outline why buying a car is the smarter choice in the long run.
You Can Customize Your Car
Leasing a car is like renting an apartment; you’re locked into someone else’s idea of what’s best for you. On the other hand, buying a car gives you the freedom to customize your ride however you see fit. You can install a killer sound system, add aftermarket accessories, or even get a paint job – it’s all up to you when you own your vehicle.
Interest Rates on a Lease Are Higher
When leasing a car, it is important to remember that the interest rates of auto car loans will be higher than buying the car. This is because when you lease a car, you’re essentially taking out a loan to pay for the car’s depreciation during the lease period. And since lenders view leases as higher-risk loans, they charge higher interest rates.
So if you’re comparing the monthly payments of a lease vs. buying a car, be sure to factor in the higher interest rate on the lease.
You Have Unlimited Mileage
One of the great things about owning your car is that you have unlimited mileage. You can drive as much or as little as you want without worrying about exceeding any mileage limit. This is a big advantage over car leasing, which usually has strict mileage limits. Owning your car is the way to go if you like to take road trips or enjoy driving.
Ownership Will Cost You Less in the Long Run
Buying a car will be less expensive than leasing one – even if you don’t plan on keeping the car for very long. There are a few reasons why buying is usually cheaper than leasing:
First, when you lease a car, you’re only paying for the use of the vehicle during your lease term. You’re not building any equity in the car, so when the lease is up, you’ll have nothing to show for it.
Second, leases typically have higher monthly payments than loans for purchase since you’re essentially paying for the entire value of the vehicle throughout the lease.
Buying a Car One Can Finance the Purchase in Several Different Ways
When you buy a car, you have the option to finance the purchase in several different ways. You can get a loan from a bank or credit union or finance the purchase through the dealership. There are several benefits to financing your car purchase, including the ability to build equity and the ability to tailor your payments to fit your budget.
When leasing a car, you are essentially renting it from the dealership. You will never own the car; at the end of your lease term, you will have to either return the car or pay a hefty fee to purchase it. With leasing, you also have to be careful about mileage limits and wear-and-tear on the vehicle.
You Can’t Negotiate a Lease
When buying a car, everything is negotiable. When you lease a car, you’re essentially locked into a set monthly payment for the duration of the lease. This leaves little room for negotiation and means you won’t be able to take advantage of any special offers or discounts that might come up.
You Can Get a Different Car Without Penalty
Leasing isn’t the smartest option if you like to change things up often or want the newest car model. With a lease, you’re locked into that vehicle for the entire length of the lease. If you try to get out of it early, you’ll be charged a hefty fee. However, when you buy a car, there’s no such thing as an early termination fee. You can sell or trade-in your car at any time without paying the penalty.
Conclusion
Based on the above reasons, it is clear that buying a car is the smartest option. Similarly, depending on your conditions, buying a car can save you money and provide you more freedom in the long term.
By: Raymond James
About the Author:
Ray is a sought after thought leader and an expert in financial and money management. He has been published and featured in over 50 leading sites and aims to contribute articles to help novice financial planners. One of his goals is to impart his knowledge in finance to educate and help ordinary people create and achieve their financial goals.
