Buying a new car is not as easy as you would presume, especially if you have a tight budget. The question then arises as to whether lease vs buying an auto would be cheaper for you. If you were to compare the costs, which one would offer the best value for your money? Some people prefer leasing to buying a car with an auto loan.
When you want to purchase a new car, you need to consider all the available options and compare costs. Both leasing and buying have pros and cons that you must look into. A lease enables you to obtain a new car after every couple of years. You will not have to worry about what to do with the car later. You will only need to return the car to the dealer and get a new one. However, you will have to part with some money each time you take a new lease. You might end up not having a car until the expiry of the lease.
Buying a car, on the other hand, enables you to build equity on every payment you make. You will eventually become the sole owner of the car and you can do anything you please with it. That is presuming that you have cleared the auto loan that you used to finance the car. You will save money if you buy the car without an auto loan. Once you have finished all the payments, you will have the car to use and you can later sell or donate it to a charity as you wish.
When you are thinking about whether to lease or buy a car, you need to consider a few issues. The most important is which between lease vs buying an auto makes financial sense. Leasing attracts a lower monthly payment than financing the car. This is because you will be paying the car's depreciation for the lease period instead of the entire cost of the vehicle. In this case, leasing is less expensive compared to buying.
With a lease, you can save a great deal of money by avoiding the initial fees and a high down payment. Generally, lease agreements have low or no down payments. You will save money by paying less sales tax as well. You will pay tax based on the monthly payments rather than the cost of the car. If you are on a tight budget and you need to do other things with the money, leasing would be the best option for you.
Leasing is still the cheaper option between lease vs buying an auto even though you pile a lot of mileage by driving a lot. You might have to pay additional fees for each extra mile. This is not much different from what you would pay if you are planning to trade the car you buy because you will still be penalized for the additional mileage.
You might find leasing more expensive if you are most likely to get scratches on the car body. In addition, if there is a high probability of your kids or other hazards damaging the car, you will pay more in terms of wear and tear fees. You might get tax rebates if you are intending to lease the car for business purposes. This would enable you to save. The tax reduction would be based on business percentage use of the car, the car cost and other expenses such as maintenance and gas.
If you want to drive the car for only a few years as opposed to time indefinite, leasing is the best option for you. However, you will have to pay more if you want to breach the terms of the lease agreement, such as getting out of the lease before the time expires.