Whenever someone goes car shopping there are a multitude of factors that one must consider about the vehicle in choice. How much will I drive it, what are the maintenance costs, and how long will I keep it are just a few questions we think of, yet the most important one will often slip our mind: buy or lease?
Buying versus leasing a vehicle is a decision that is truly dependent on the shopper’s lifestyle. While the common answer is to just purchase the vehicle, leasing does offer some benefits to people who may not be in a position to purchase the car of their choice, or for those who like the option of having a new car every few years. FAR has broken down the pros and cons of leasing by comparing two different lifestyles below.
For the busy parent on the go, buying is better because…
You won’t have to worry about mileage, or excessive wear and tear penalties.
You’ll have higher monthly payments, but will still have residual trade-in value after the vehicle has been paid off. You can use that money to trade in on another purchase, or can sell the car for its value for cash.
Once the warranty is expired, you have the option of purchasing an extended warranty or paying full service costs for maintaining the vehicle. Leasing
You’ll have lower down payment and monthly payments but will not have trade-in value at the end of the lease.
Cannot exceed mileage limits without penalties or purchasing extra mileage options in advance.
Vehicle must be kept in pristine condition at the end of the lease or the lessee will be charged “excessive wear and tear” penalties.
For the powerful businessperson who is constantly traveling leasing is better because….
Car will hold some type of equity, and can be used for whatever professional or personal purposes the driver needs
Cannot easily write off the car as a company vehicle, will not receive any special tax breaks
Will have to trade-in a vehicle in order to get a new car, won’t be able to trade in the car for the purchase price.
Can write business expenses and trips that the car is used for off on taxes
Can lease a car that is more expensive than he can afford to buy
Can afford to get a new vehicle every few years.
If he is often away on business and is not driving the car, he does not have to worry about excessive mileage or other penalties. Will end up getting what he pays for by the end of the lease.
These are just two general lifestyle comparisons when it comes to leasing or buying a vehicle. For the individual car shopper, these two lists may be much longer or much shorter, depending on the intended use of the car. When it comes to car shopping, taking a good, hard look at your lifestyle will help you make the right financial decision every time. Whether you choose to buy a new car or lease one, FAR can provide all the services needed to keep your warranty valid!