While buying a car, choosing between buying and leasing is always an issue, but mostly the leasing loses due to few reasons. Though leasing doesn’t give much financial benefits; it is still a popular choice among the car buyers. Financial analysis of leasing vs. buying When you buy a car you have to make a down payment and pay monthly installments for the chosen number of years along with the interest. When the car is finally yours, say after 3 years, it can still fetch you a resale price of half of what you spent in purchasing it.
However, if you lease a car say, for a 3 years’ period, you will be paying a down payment and monthly installments. The total amount you would be shelling out would more than the resale value of the car. What’s more at the end of the lease term, you will again have to look for a new car or find a car for lease.
So, if leasing a car is a more expensive proposition than buying, what actually are the perks the buyer’s going to get with leasing? To know that let’s look the benefits of buying over leasing first.
Advantages of buying a car in comparison to leasing• You can keep the car whichever way you like – The car owner will get the opportunity to keep the car in a shabby or shining state as per his preference. For buyers, the car is completely owned by them and they can do whatever they want with it. It means, they can customize it to their taste by introducing trendy spoiler, have custom paint over the car, try tinting, have glamorous rims, install the most advanced sound system and do/add many more whacky things in the car. They have full freedom to eat food of their choice, spill it and do anything without any worry. For days they can also avoid its maintenance or washing but by doing all these things the resale value of the car will be affected. However, the buyers are wise enough to know what things can spoil their car but the things stated above are just some possibilities that a buyer can do. A rented car or leased one may not give you these benefits.
- Drive miles without worry – With a bought car the owner can go anywhere without worrying about the mile limit or any other extra fee for exceeding the limits. However, leasers have annual mile limits that range between 12,000 and 15,000 miles per year. They have per mile penalties too for going beyond the set limits. On the other side, a car owner can enjoy long road trips to any number of miles without taking anyone’s permission or worrying over penalties. This is not possible with a leased car.
- Feel great on being the owner – Buying a car means, you own it as asset and it is something which has some value. Ownership gives you lot of benefits as it is all yours. The fuel charges and maintenance are the only things to consider and the owner can use it copiously until it becomes so useless that it has to be moved to a junkyard. Further, the owner can also sell it if its resale value is high and use that amount for buying a new one. Leasing doesn’t give you this facility as you don’t own the vehicle.
- Freedom to sell and move on – It is easy to change the car anytime or get out of contract if you buy a car. For instance, if you have to move to another place from your current location, the best option is to sell the car and buy a new one. It is possible if you own a car but for leasing you may have to pay the full amount or find someone who wants to take it over, which can be a difficult process. In summary, leasing enables you to swap low monthly payments for limitations and additional problems.
Advantages of leasing over buying Certainly, there are some advantages of leasing as well which compels people to get a car on lease instead of buying one. One major reason is lower monthly installments. People taking a car on leaser therefore have less pressure over their monthly budget. Besides, people who love driving latest cars, find leasing more appealing. Also, in following situations leasing makes more sense:
- When new car is unaffordable, but needed – People, who are in jobs where they have to drive client around, would be more interested in leasing a car.
- When you feel safer driving late-model cars only – If the new cars are unaffordable, going for a leased car is only option left.
- You are getting subsidized lease – If the auto dealer or manufacturer is offering a good discount on the leased car so that its total cost comes out to be a cost effective proposition, leasing makes financial sense.
- Getting a car on discounted lease – If you find someone, who can no longer afford the lease, and is offering you a discount, leasing sounds a good option.