How To Compare Leasing Vs Buying A Car

Are you still thinking about purchasing a new car, but you aren't sure about the best way to do it? I'm sure you have heard about several methods of doing this. How to compare leasing vs buying a car? Which are the pros and cons? What are the costs involved?

Do you need to avoid making a large down payment? If your answer is "yes", then you should opt for leasing. This is the most affordable form of financing, because you'll make monthly payments for the length of the contract.

When you lease, it means that you pay just for using the car for 2-3 years. This method is more flexible and doesn't involve a long-term commitment. If you want to stop paying for the car, you can give up using it when the lease period is up. By paying off the remaining balance (residual value), you will keep the car for further use. Keep in mind that driving the car for more than 12, 000 miles per year will result in additional fees and penalties. Lease payments are based on a finance charge and a depreciation charge.

Leasing a car requires the user to pay any insurance costs. However, leasing involves lower monthly payments and flexibility. You won't have to support any costs for expensive repairs, as long you take care of the car. The residual value (20% of the car value) can be paid at the end of the lease; this way, the monthly rates will be reduced. If you have in mind to go outside the country, you will need the leasing company consent.

How important is it to you to own a car? If this fact has a major importance to you, then you should buy a car. In this case, the costs are higher, because you will have to make a down payment, being responsible for taxes, registration, or the cash price. The main advantage of buying a car is that you can modify it or resell it whenever you want; moreover, you can travel as much as you want.

Keep in mind that buying a car involves higher loan payments. However, you will have no further payments at the end of the loan term; you'll own the car. Leasing vs buying a car is a personal or business choice.

By: FrankRod

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When evaluating leasing vs buying a car it's important to do what's best for your personal or business situation. Regardless, you'll find the car buying calculator helpful when it comes to your car buying or leasing needs.