New cars are pricey and that translates to big monthly payments. No wonder that the lower payment you have when you lease a car has made leasing popular. Rather than only looking at the monthly payment, though, the question is really: which financial approach best meets your needs? There are many details that are not immediately obvious when considering whether to lease vs buy a car. Below, you can read the differences between leasing and buying, provided to us by a Chevrolet dealership in Douglaston, NY:
Buying a car means that you take ownership of the car. Many people prefer this but before purchasing a new car, grab your calculator and figure out what it is going to cost you each month. Start with the monthly loan payment and add other monthly car expenses. When you have your numbers totaled up, make sure that the total amount does not put a strain on your other household expenses.
You should shop around when looking for a car loan. You can obtain online financing too. You might be able to arrange for a loan’s pre-approval from your credit union. When you do some of these things, you might not have a specific car in mind, just a ball park price range, and when you make the deal you write the dealer a check for the total amount. Some financial institutions will give you a low interest rate if you have direct deposit and/or an electronic loan payment, so be sure to inquire about it.
Less money down and lower monthly payments can make leasing seem like a fantastic deal. What’s not to like? The truth, though, is that leasing offers tons of convenience, but only if you can tolerate some limitations. Many leases, for example, include low annual mileage limits – often only 12,000 miles per year and many leases require you to take tons of rides to the dealership for checkups. Make sure the sum total of the restrictions mandated by the leasing company work for you. The biggest problem could be the annual mileage limits for a number of drivers.
Another problem is what happens when your lease term expires. When the lease is up, you will usually be offered a price that you can purchase the vehicle for. Be sure to pay close attention to this “end-of-lease purchase price” and any extra fees that may be tacked on. Some leasing companies don’t state what the end-of-lease purchase price is and this is cause for concern. It might be higher than what you expect!
You’re a great candidate for leasing if you prefer to have a new car every few years and put limited miles on your vehicle every year. Leases are also great for people that can write off a car’s use for business use.
No matter whether you decide on buying or leasing, look for incentives on your car of choice. From 0% financing to customer-cash rebates, car makers are constantly competing for your business by making their vehicles and financing more financially manageable.