How to know if auto leasing or buying is right for you

The following post originally appeared on our RoadLoans blogThe Open Road.

Should I lease a car or buy one?  It’s a common question when consumers think of getting a new car. For some, leasing is a difficult call. It’s tantamount to renting an apartment. We have been conditioned, trained, brought up, if you will, to believe that the goal in life is to flat-out own everything you spend money on, right? Well, believe it or not, leasing a car can have its advantages, if you know what you’re doing. The same can be said for buying. Let’s take look at the pros and cons of leasing versus buying.

The Pros

  • Most lease cars require a small or no down payment. This makes getting into a new car easier for cash-strapped buyers or frees up your cash for other things.
  • Leasing a car provides lower monthly payments. With a lease, you’re basically only paying for the amount of time you will be using the car. Whether it’s a 2 or 3-year lease, monthly payments can be up to 30 percent cheaper than payments for buying a vehicle.
  • Lease cars don’t require much maintenance. Usually, a lease car is either new or barely used and has very low mileage. Either way, there usually isn’t too much wrong with the car, or it’s still under factory warranty.  So you save money on costly repairs.
  • Leasing a car means getting more for your money.  With a lease, you allow yourself to drive a new car every few years. It also means driving a more expensive car for less money. No need to worry about paying for the entire cost of a new luxury vehicle. Leasing gives everyone a chance to upgrade to the limited edition driving experience.

              The Cons

  • Leasing means you will always have a car note.  You won’t own any of the cars you drive. So understand that when you lease, you will never pay your car off.
  •  Extra mileage can eat up those extra savings. Before leasing a car, monitor your mileage.  Negotiate for the amount of miles you will need before signing on the dotted line. Going over the allotted mileage could cost you a pretty penny.
  • Insurance on a lease car can be expensive.  Many leasing companies require more coverage, sometimes up to $300,000 in liability. Again, you thought you’d save money on a lease, but increased insurance premiums could gobble it up.
  • Don’t even think about terminating your lease early.  Lease contracts are designed to discourage or prevent early termination. If you do, it’s likely you’ll pay a hefty termination penalty, and the earlier the termination, the heftier the penalty. If you know you want a short-term lease, look specifically for those deals. It’s better to extend a short-term lease than to try and back out of a long-term one.

Leasing and buying are similar in this: You have to shop for the best deal. Just like buying, with leasing there may be different incentives that are available, but you have to do your research.

Still not convinced that leasing is the best way to go? You can always get pre-approved to buy a new or used car with RoadLoans. Apply online, get an instant decision, and be on your way to getting that new car and owning it. If credit or cash-down issues had you considering the lease, don’t worry.  RoadLoans works with a wide variety of customers with a wide range of credit challenges.

Keep your options open. Look at all of your choices before making the decision. Whether you lease a car or buy, it’s still an investment that needs to be considered carefully.

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