If you’re looking to drive a new car, there are two main ways of going about it. The traditional method is to buy a brand-new model straight from a dealership, often using credit to make it more affordable.
However, there’s an alternative way that’s gaining in popularity. Leasing offers many advantages compared to buying, but also some genuine downsides. Which one should you choose? Waters Car Wash highlights the pros and cons of both to help you decide.
1) Leasing Offers Lower Costs
All else being equal, leasing gives you the chance to drive a better car at a lower monthly cost compared to buying new. This is because when you finance a purchase, the repayments need to cover both the sticker price and the interest on the loan.
With leasing, the payments only have to cover the costs of the car’s depreciation over the contract length, as well as the leasing company’s profit. This can lead to monthly payments up to 25% lower than buying the same car using finance.
2) No Down Payments
When you lease a car, you don’t usually need to provide a down payment, although doing so can get you a better deal. But when you buy new, you’ll likely need to make a sizable down payment to get an affordable finance package, pushing higher-priced cars even further out of reach.
3) Get a New Car More Often
Leasing also allows you to change your car more easily and more often. A typical lease contract lasts for two to three years, and at the end of it you can upgrade to a new vehicle at no extra cost. When you buy, your car loan usually lasts at least five years, and upgrading during this time can involve a lot of extra paperwork, settlement charges, and hassle.
4) Leasing Doesn’t Build an Asset
However, one drawback of leasing is that once your contract is up, you’ve nothing to show for your years of repayments. When you buy, your repayments may be a little higher, but once they’ve finished you’re left owning the car as an asset you can sell.
5) Better Warranty Coverage with Leasing
When you lease a car, it’ll generally stay within the manufacturer’s warranty for the entire period you drive it. This can reduce repair costs considerably compared to buying new, where you’ll typically lose the warranty coverage after three to five years.
6) Wear and Tear Charges
On the other hand, when you own your car minor scrapes, stains, and other wear and tear issues aren’t necessarily a problem if you’re prepared to ignore them. But when you lease, you need to return the car in near-perfect condition at the end of the contract, and so careful maintenance is essential to avoid being hit with hefty charges.
7) Unlimited Driving with Buying
When you lease a car, your driving will be capped to a certain number of miles per year. You may be able to go above this, but you’ll be charged a premium for each extra mile. When you own a car, there are no limits. If you drive a lot each year, this extra freedom can be an extremely important consideration.
Lastly, when you own your car, you can upgrade the accessories whenever and however you want to. If you want to install a better audio system or add window tints, you’re free to do so. With a leased car, you can’t make any alterations at all, and will need to wait for your next contract to upgrade anything you’re unhappy with.
Waters Car Wash understands that both leasing and buying have their benefits and drawbacks. If you want to be always driving a newer car with the minimum of commitment and expense, then leasing is highly attractive. However, it can be a never-ending conveyor belt that doesn’t build an asset but still costs you every month.
But if you’re prepared to put up with a slightly higher cost, along with less ability to change your car so often, then buying gives you greater freedom to drive, upgrade, and maintain your vehicle without worrying about penalties and charges.