Tag: buying a vehicle
Deciding whether you want to buy that shiny new Toyota or lease it isn’t always easy to do, and it’s tough to figure out which option is the more financially savvy one for your particular situation. Unfortunately there is no one-size-fits-all answer to whether leasing or buying is the better option and they both have their downsides and upsides depending on what type of car owner you are. Take a moment to learn more about both buying and leasing vehicles and you should be able to make a decision for yourself.
Assessing Your Commitment
Think about how long you plan on keeping the vehicle you have sitting in your driveway currently, and be realistic about it. If you are the type of person who wants to switch to a new model every couple of years vehicle ownership may not be the right option for you. If you regularly trade in for the newest model you are paying much more than you have to be for your vehicles. Owning your vehicles is the more affordable option if you stick with your car for as long as you can, but if you are itching for a new vehicle just a couple years after making your purchase a lease could be more affordable for you.
When you lease a vehicle there is a limit to the number of miles you can put on it throughout the term of your agreement. If you drive a high number of miles on a yearly basis you will have to agree on a higher number of miles in your lease agreement, which ultimately means that you will pay a higher monthly rate. If you don’t add enough miles to the agreement you risk running out and having to pay overage fees for each individual mile over the total limit which can be very expensive if you’re thousands of miles over where you should be. If you are the type of driver who travels more than 12,000 to 15,000 miles a year you might have a hard time relying on a lease.
Lease payments are normally cheaper than loan payments because you aren’t paying for the value of the vehicle, only the depreciation that it is going to experience over the term. So if you lease a $20,000 car you might pay around $12,000for depreciation over the term while you would be paying the full $20,000 on the loan. That means that the lease payment is close to half of what the loan payment is going to be. If you need access to more money each month it makes sense to lease rather than buy.
Paying for Wear and Tear
Buyers enjoy leasing cars because they have access to new shiny vehicles every three to five years. The only downside to a lease is all of the wear and tear fees that you have ot dela with. When you lease a vehicle you will have to pay wear and tear fees for a vehicle that takes any damage. If you have issues with keeping cars in good shape you could end up being stuck with a stiff fee at the end of your lease for problems you may not have to have corrected on a vehicle you own.
Now that you know a bit more about buying and leasing you can decide if it makes more sense to purchase that new Corolla or simply lease it and look out for a newer model in a few years from now.
If you’re planning on shopping for a new vehicle, or will be in the next year or two you may be considering whether you should lease or purchase that new Subaru you’ve had your eye on outright. I would love to tell you that you should buy a vehicle or that you should lease a vehicle, but one option isn’t right for everyone. You must consider the benefits and drawbacks of each situation, and how your car ownership habits affect the whole situation. Only when you do this can you truly determine if you should be buying a car, or signing a short-term lease agreement instead.
How Often Do You Want a New Vehicle?
One of the biggest considerations that you have to make, and you need to be honest here, is how often do you want a new vehicle? Are you willing to deal with an aging vehicle past the first five years that begins to have mechanical problems that need to be addressed? If you are the type of person who will commit to a vehicle and drive it as long as possible then owning is much more affordable than leasing. Especially with quality vehicles like the Subaru Impreza WRX. If you don’t like dealing with repairs and will want to switch to a new vehicle every three or four years then leasing is probably a better deal and will actually save you money.
Saving Through Lower Payments
The way that leasing can save some buyers money is through the lower payments. A lease payment is lower than a car payment because the lease only cover depreciated value. If you lease a vehicle that starts at $25,000 and will be worth $15,000 after the three year period is over you only pay the $10,000 in depreciation. If you were to buy that same vehicle your payments would be going to cover the full $25,000 which is why you would be paying so much more each month.
If you are getting a vehicle for business purposes it actually makes more sense to buy than it does to lease most of the time. This is because of all the additional deductions that you can take. Not only can you deduct the vehicle payment that you are responsible for each month, but also the depreciation of the vehicle, the mileage and the operating expenses for the vehicle. All of these deductions really add up and you might find your yearly costs of buying versus leasing to be more affordable for that reason.
Consider Your Yearly Distance
Most lease agreements cover between 12,000 and 15,000 miles a year. If you go over that by a significant amount leasing probably isn’t going to be affordable for you. Lease agreements that offer higher mileage amounts cost more money to obtain and if you go over the amount you’ll be hit with a stiff penalty. That being said, if you don’t drive very far you may actually save even more with a lease and could work out an agreement with a lower mileage amount.
When you take the time to consider the benefits of leasing and buying a vehicle it makes it a bit easier to come to the right conclusion. For some people it simply makes a lot more sense to lease than to buy, but for others buying is clearly the more affordable option.