More money in your pockets? Should you lease your car before you buy it (or vice versa)?
One of the biggest questions someone faces when shopping for a new car, is whether to lease or to buy. Most people would like to get the car they want, while keeping more money in their pockets. To do so, it is important to consider the big picture of both options and what kind of driver you are. Let’s take a closer look.
Inspecting And Buying Used is Cheaper in The Long Run
Leasing may look attractive at the outset of the purchase, but when looking at the big picture, finding a quality used vehicle and buying it usually provides the best value.
One reason leasing appears cheaper, is that the dealership knows they will get a larger financial return for their vehicle. If you’re paying them $200 a month for 24 months, and then they get to resell the car for roughly 60-70% of its original sticker price, they are going to come out on top. Also, if you decide after the leasing agreement to outright purchase the car, you may be adding a 60 month lease onto the remainder owed. While this may sound cheap, the added interest payment to the dealership more than makes up for it, on the dealer’s side.
Shopping around and inspecting used cars, will help you to get a good idea of the market and your available options. In doing so, you can choose what fits your needs best. Once you’ve found that car, every penny you pay towards it, is going toward the ownership of that vehicle. In contrast, when leasing, you are just paying the dealership to drive the car. You have no equity in that vehicle.
It is important to consider the amount of miles that you drive. Leasing contracts restrict how far you can drive in order to ensure their car retains its value. You also have to always be aware of the fact that the car is not yours, and you cannot make any modifications to it. Think of it as a rental that you have to return as close to its original condition as possible.
So if you would like the freedom of driving your own car wherever and however far you would like, buying is the way to go. Additionally, your payments are an investment, rather than a pay-for-use structure. In the end, you can always flip your car and get another one if you want something newer. If you wisely choose the original used car through a thorough inspection, you can ensure your car is a profitable investment.