Saturday, October 20, 2012

Buy or Lease? Which is Best?

It’s the classic dilemma that faces every auto-consumer out there: Pay cash upfront or forego the ownership and pay monthly settlements instead? Buy or lease for a new set of wheels?


As is the case with every other common dilemma, there is no slam-dunk answer. Each option has its own benefits and drawbacks, and it all depends on a set of financial and personal considerations.


First, your finances. Affordability is clearly key, and you need to ask the question of how stable is your job and how healthy is your general financial situation. The short-term monthly-cost of leasing is significantly lower than the monthly payments when buying: you only pay for “the portion” of the vehicle’s cost that you use up during the time you drive it. 

If you have a lot of cash upfront, then you can opt to pay the down
payment, sales taxes - in cash or rolled into a loan - and the interest rate determined by your loan company. Buying effectively gives you ownership of the car and that feeling of “free driving” that goes on providing transportation. If, say, you want to get into luxury models but can’t afford the upfront cash of purchasing the vehicle than you’re a good candidate for leasing.

Unlike buying, it gives you the option of not having to fork out the down payment upfront, leaving you to pay a lower money factor that is generally similar to the interest rate on a financing loan. However, these benefits have a price: terminating a lease early or defaulting on your monthly lease payments will result in stiff financial penalties and can ruin your credit. You need to make sure you carve out the monthly lease payment in your budget for the foreseeable future, at least for the duration of the lease. 

Besides the financial aspect, making a buy or lease decision depends on your own particular lifestyle choices and preferences. Think about what the car means to you: are you the sort of person to bond with the car or would you rather have the excitement of something new? If you want to drive a car for more than fives years, negotiate carefully and buy the car you like. If, on the other hand, you don’t like the idea of ownership and 
prefer to drive a new car every two to three years then you should lease. 

Next, factor your transportation needs: How many miles do you drive a year? How properly do you maintain your cars? If you answer is: “I drive 40,000 miles a year and I don’t really care much about my cars as I don’t mind dealing with repair bills”, then you’re probably better off buying. Leasing is based on the assumption of limited-mileage, usually no more than 12,000 to 15,000 miles a year, and wear-and-tear considerations. 

Unless you can keep within the prescribed mileage limits and keep the car in a good condition at the end of your lease, you might incur hefty end-of-lease costs.


16 comments:

  1. I'm so impressed on how you handle your business, family and personal finances you have a pretty impressive blog you mentioned that your hobby is computer ever since cfp online programs that tyou might be interested in learning more.

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  2. My brother is about to look for a licensed money lender to supposedly buy a car but I figured he needs more time to think about it since he has the tendency to do things impulsively. Just so you know, this is a great post to lessen the dilemma. Thanks!

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  3. Thank you for this post. This will help people if they will go for auto financing for bad credit or not. As for my personal tip, choose a financing company that does offer low interest rate.

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  4. If your talking about buying a home or renting a unit I would prefer the latter choice cause I think if you have your own house you are more secured and stable, That's why I'm suggesting that whenever you decided do get any housing loan you should always choose a quality mortgage leads to assure that you got the best option.

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    Replies
    1. This is also applicable to a newly-established companies and either ways to be able to assure that your home or your car or your company is safe you could avail to several asset protection strategies which will help you out in managing them.

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  5. My dad never bought his car. It was a company car that he took care of himself, using his own money and efforts to keep it alive and well. It was really good that his bosses decided to give the car to him and actually have it transferred to his name. The conveyancing in brisbane is not that difficult to undergo as it seems.

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  6. Well in my opinion, I would rather purchase it and pay cash upfront rather than paying it monthly. Why? You really don't know if there are some expenses that will come your way for the next couple of month. To get rid of delayed payments, better pay for it the moment you purchase one. Well of course, you need to save money first as it may be costly. In my case, I bought a used trucks online as I don't have enough budget yet.

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  7. In my opinion, it is better if you buy one and pay it upfront rather than paying it in an installment basis. Purchasing car is really costly, however, there are cars online that are still affordable. Just pick the right one.

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  8. That's the beauty of asking for the assistance of a mortgage broker penrith while having this dilemma. It can really help those of us find the cheapest option and from that point onwards, we could decide whether it can be purchased in cash or if it offers no interest rates that we can just loan it.

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  9. It really depends on your financial situation and I recommend a personal evaluation. Leasing long term is unproductive as the money you commit can be instead used for downpayment for a car. For starters, you can start with a personal loan.

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  10. Being one of the mortgage lenders in massachusetts takes a lot of honesty to have a good communication among our clients. Because of this "trust" we build among them, we are assured that they can pay on time.

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  11. I'm not pretty sure how to decide on this one. Buying one would cost me a lot of money in a single transaction, while on the other hand, leasing would be costly if I do it, say twice or thrice a month. Besides, I still have plans to buy residential property of my own, so getting a car would be a second option.

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  12. Maybe it's better to go for a lease instead. Like what companies do with the novated leasing schemes for their employees' cars.

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  13. This will help people if they will go for Florida Accountant. As for my personal tip, choose a financing company that does offer low interest rate. Thank you for this post.

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  14. I would rather buy or loan for a car. Some countries have this law that any type of accident will be covered by insurance. I think this is also applied in prudential life.

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  15. What a wonderful piece of information Admiring the time and effort you put into your blog and detailed information you offer!

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