Do you prefer a different ride every few years? Or maybe you look forward to someday being free from a vehicle payment. Depending on how you answer those questions, you’ll know better if leasing a car versus buying one is right for you. Here are some facts to help you decide.
Consider what the car will cost you
With a lease agreement, you don’t own the vehicle. Initial costs may include first month’s payment, security deposit, acquisition fee, down payment, taxes, registration and other fees. Monthly lease payments are typically lower compared to a loan payment to buy the car because you’re only paying for the depreciation during the lease term, interest and other fees.
Buying a set of wheels means you own the vehicle. Those upfront costs may include down payment, taxes, registration and other fees. Monthly finance payments are usually higher than lease payments and include interest, finance charges, taxes and fees.
LGFCU can help with a New Auto Loan or Used Auto Loan to cover your car financing, if you qualify. We’re also available to help you get the new car you want at a price you can afford by negotiating for you when you use our Car Buying Service.
With the Credit Union’s Auto Power program, if approved, you’ll get a pre-approved check up to a specific dollar amount for the purchase of a new or used vehicle.
Weigh vehicle purchase and term limits
A vehicle lease gives you the excitement of driving a recent model vehicle every two or three years. At the end of the lease you can finance the remaining balance to purchase the car or lease another car. Otherwise, you can simply return the vehicle at the end of the lease and walk away.
Early termination charges can be costly, if you end the lease early. This can sometimes cost just as much as if you had completed the lease term.
If you’re buying the car rather than leasing it, you’ll have to sell or trade in the car if you decide you don’t want it any longer. Unlike with a lease agreement, you can make this decision any time you wish when you buy your car.
Key considerations when deciding to buy or lease a car
|Vehicle purchase and term limits||
|Wear and tear||
Mileage plays into your buy or lease decision
You can drive the car as many miles as you want if you buy it. Alternately, you face car lease restrictions like a limited number of miles you can drive annually. The most common mileage allotment for leases is about 12,000 to 15,000 miles per year. So, if you have a long commute to the office or enjoy family road trips, think carefully about a lease option.
Excessive wear and tear could cost you
You don’t have to worry about wear and tear on your new ride, if you buy it. It’s up to you to keep up with maintenance costs when you purchase a car. However, you’ll be responsible for wear and tear on a leased vehicle. Extra charges will be added to what you owe at the end of the agreement if you exceed what’s considered normal wear and tear.
These tips, combined with a lease or buy tool like an online calculator, can help you decide which option makes the most sense for your budget.
The advice provided is for informational purposes only.