Buying vs. Leasing ©autogazeta.com

What is Buying? Buying a car is when you pay cash for a car and own the car immediately, or you pay a down payment and a monthly payment to later own the vehicle ©microsoft clipart

What is Leasing? Leasing is when you rent a car from a dealer for usually 24-48 months. Price is determined by the difference between the purchase price and the predetermined value of the car at the end of the lease period. In a nutshell, leasing makes it easier to get more car for less money. This is because you only pay for the value of the car that you drive, instead of buying and owning the entire worth of the vehicle.

The Advantages of Buying No mileage restrictions You own the car– so you can keep it as long as you like You can alter the car any way you want As you make payments, you gain equity in the vehicle until it’s eventually all yours You can drive as much as you like. There's no excess mileage penalty. You have more flexibility since you can sell the car whenever you want.

The Advantages of Leasing Monthly lease payments are typically much lower than compared to buying the same car. Low or no down payment There’s often no down payment required when leasing, or only a low one. You can drive a better car for less money. When your lease is up, you can lease another vehicle so you’re always driving a late-model vehicle that’s usually covered by the manufacturer’s warranty Get to enjoy the most trouble-free two or three years of the vehicle’s life. When your lease is up, you bring the vehicle back to the dealership and either lease another new one or simply walk away Lower repair costs because you’re always driving a late-model vehicle that’s usually covered by the manufacturer’s warranty. You can more easily transition to a new car every two or three years. There are no trade-in hassles at the end of the lease. You don’t own a car at the end of the lease – although there is an option to buy. Excessive wear-and-tear charges can be a nasty surprise at the end of the lease. Costly to terminate a lease early

The Disadvantages of Buying Monthly payments are higher than lease payments. Once the warranty expires, you're responsible for repair costs. Term for payments are longer It requires a higher down payment to avoid being "upside down" in the loan, meaning you owe more than the car is worth. You face possible trade-in or selling hassles when you decide to get your next car. More of your ready cash is tied up in a car, which depreciates in value.

The Disadvantages of Leasing There are mileage restrictions - You have a limited number of miles in your lease contract, typically 12,000 to 15,000 miles a year. If you drive more than that, you’ll have to pay an excess mileage penalty of 10 cents to as much as 25 cents for every additional mile. You don’t own the car You will get charged if you try to terminate the lease early You need good credit to get a lease Leasing typically costs you more than an equivalent loan, in part because of higher finance charges. Once you’re in the leasing habit, monthly payments go on forever. You must maintain the vehicle in good condition, or you’ll have to pay excess wear-and-tear charges when you turn it in. If you need to get out of a lease before it expires, you may be stuck with thousands of dollars in early-termination fees and penalties—all due at once. This could equal the amount it would cost had you stuck with the lease for its entire term. You aren’t allowed to customize your vehicle in any permanent way.

If Money is a Problem, Lease The short term cost of leasing is significantly less than buying The medium-term cost of leasing is about the same as buying The long-term cost of leasing is always more than the cost of buying.

Just a few Things to Help You Decide Which is Right for You Lease if: You like to have a new car every 2-4 years Don’t like to be bothered with repairs You know you will keep the car for the full term You are self-employed and can write it off at the end of the year

You want to drive a nicer car than you can afford to buy You don’t have the money for a down payment You have good credit

Finance/Buy if: You don’t mind driving the same car for many years You think you may have to give up the car unexpectedly You are buying a car for personal use You want to build equity Your credit is poor

Works Cited www.autoadvice.about.com www.investopedia.com www.autoleaseco.com