Should You Buy or Lease Your New Vehicle?
Most of the time, you want to pour your money into an asset that builds up a financial value over time. A car may not fall in this bracket, but it is an investment worth making if you want to build equity for buying your next car in the near future. In this regard, leasing has also emerged as a viable option for those looking to drive a new car. However, this option brings along a lot of disadvantages as well. As a matter of fact, you should use your best judgment to make an informed decision of buying or leasing a vehicle. Analyze them deeply on the basis of your individual requirements and criteria. Here are the main points to consider:
With a leased car, you can fulfill your aspirations of driving around in the latest vehicle. These are new vehicles that require minimum maintenance. In most cases, a leased vehicle is returned even before it shows any signs of deterioration. Financially, this decision has many advantages. You can write off the lease amount as a business expense to claim tax deductions. The upfront costs, including the down payment, are extremely low. Mostly, there is no down payment to be made or it is relatively lower when compared to buying a new car. The sales tax is less and so are the monthly payments that you are required to pay under the lease.
The lease agreement is effective for a limited period of time and number of miles. This means that you cannot drive the vehicle beyond the maximum limits applicable to the lease. You have to return the car after the expiry of the lease term. In this case, you can either negotiate the mileage or put a cap on your miles. Both these conditions can be frustrating in the long run. If you unfortunately lose your job or face any financial hardships, it becomes challenging to make the payment of the lease on time. Even if you don’t own the car, the full responsibility for the repairs not covered under the warranty will fall on you.
When you buy a car, it offers you sole ownership along with many benefits that you can’t resist. Firstly, you can drive this vehicle according to your personal habits and preferences. There is no need to worry about the lease coming to an end. Also, there are no limitations on the number of miles that can be driven in this car. Your car becomes an equity that can be liquified anytime. Plus, the car can be customized with any paint color or graphics that suit your tastes.
The severe load of financial planning falls back on you when you decide to buy a car. This decision can cost you thousands of dollars in terms of down payments and upfront costs. The loan application process can sometimes be an uphill task. Moreover, the depreciation incurred on a new vehicle is a major concern for car buyers.
Consider all these points and make a selection accordingly.