What are the Advantages and Disadvantages of Buying vs. Leasing?
A decision to buy a new car can be exciting and confusing at the same time. There are many options to explore. But, the main choice has to be made between purchasing or leasing your car. Both offer a lot of perks and have some drawbacks as well. As a rule of thumb, you should assess your requirements and choose the right method of driving home a new car accordingly. Here, the main advantages and disadvantages of both these options are explained for your help.
Advantages of Leasing a New Car
When looking for a leased car, you don’t need to worry about the upfront costs that may include a bulky down payment along with other expenses like registration charges and taxes. Also, this option can lower your monthly expenditure because they do not entail the high monthly installments of a purchased vehicle. In fact, the amount of monthly payments can be nearly 60% less when leasing a vehicle. With this option, you can enjoy the pleasure of driving the latest model every two-three years. The warranty available with a leased vehicle is very lucrative. Usually, the costs of repairs and maintenance are covered by the comprehensive warranty available in this option.
Disadvantages of Leasing a New Car
First and foremost, you do not get the ownership of the leased vehicle. Rather, you have to return it back after the completion of its term or on reaching the predefined mileage. If you want to end the lease before its expiry, the lessor can charge an exorbitant amount as a penalty for the same. If excessive wear and tear takes place in the vehicle, you have to bear the costly repairs. Also, you cannot customize a leased vehicle according to your preferences and choices.
Advantages of Buying a New Car
When you decide to buy your dream car, you are relieved from many uncertainties. Firstly, there is no ending term of the lease and you never need to worry about driving more miles in your car. This is because you become the owner of a purchased car. There are no lease charges and no further payments to be made on expiry of the loan term. The vehicle retains an impressive resale value as well. If you can find an adequate insurance coverage, the decision to buy a car has no financial implications in the long-term. You can customize the car in any way that you like.
Disadvantages of Buying a New Car
Despite all these benefits, it can be financially burdening to invest in a new car. There are heavy down payments to be made and monthly installments to be paid for building your equity in this vehicle. If any unexpected mechanical breakdown takes place in the car after the expiry of the warranty, it can lead to heavy repairs.
Both these options offer different benefits. Therefore, you should make a selection according to your individual preferences. Buying is a better option from the long-term perspective while leasing is good for short-term ownership.