Time For A New Car? Leasing VS Buying
Getting a new car is a big deal. After buying your home, getting a new car is the next goal many of us have. A car means no more relying on transportation from buses or friends and family. It is also an expensive milestone. But you do have the option of leasing or buying a car. If you have no idea what either means, here are the pros and cons of leasing and buying a car.
What Does Leasing A Car Mean?
What does leasing a car even mean? Leasing a car is basically like renting a car. You have a certain length of time and a certain number of miles you can have the car for. You’ll have to make monthly lease payments and, typically, have good credit. While you aren’t buying the car, your credit will show your lease payments. After your lease is up, you can either buy the car or return it.
Pros And Cons Of Leasing
There are certain pros and cons you have to consider when deciding if you want to lease a car.
One pro is your low monthly payments. Your monthly payments are low because you are only paying a part of the car value that you will be using over the period of time in your lease – which is typically three years.
Another pro is the ability to get a new car every three years. Since the typical lease ends after three years, that means you can be in a different new car every three years.
The last pro is you are usually under the vehicle’s factory warranty. This means you will have lower repair costs when you go for maintenance.
The first con is, while you have low monthly payments, you have penalty charges. Mileage is one penalty you have to pay. You have a specified number of miles you can use and if you go over, you are penalized for it.
Another con is the fees for excessive wear and tear. When you own a car, it’s up to you if you deal with any type of wear and tear. With leasing, you have fees if you return the car with excessive wear and tear.
The last con is needing down payment money every few years. Every time you lease a car, you have to pay a down payment on the lease amount. If you plan on leasing cars every three years, you’ll need to have that down payment money every three years – on top of your monthly lease payments.
What Does Buying A Car Mean?
When you buy a car, you and a dealership form a contract where you agree to pay a price over a period of time. The price includes the amount the car was financed and a finance charge.
Pros And Cons Of Buying
Just like there are pros and cons of leasing, there are also pros and cons of buying a car that you need to consider before making a decision.
One pro of buying is paying less for the car over the long term. While monthly lease payments are lower than car payments, car loan payments allow you to build up equity for when you go to sell the car. With lease payments, you aren’t building up to anything.
Another pro is owning the car. When you own the car, you have the control to go to any mileage you want, sell it whenever you want, and so on. You aren’t forced into an “ownership period” like you are when you don’t own the car. Plus, owning the car can give you a sense of pride.
The last pro is the ability to do whatever customizations you want to your car. You can paint it, get new interior, and get whatever accessories you want. With a car that isn’t your own, you cannot do that.
A con to buying a car is the down payment is usually a lot higher than when you lease a car. The low down payment and monthly payment is what makes leasing look like a good option.
Another con is your warranty. After your factory warranty is over, any maintenance you need done on your car is completely up to you to pay. Anyone who has needed to have maintenance done on their vehicle can attest to how expensive it can be.
The last con is depreciation. Car depreciation is the decrease in its value. It is estimated that cars lose 11% of their value as soon as you drive it off the car lot. By the time its paid off entirely, it can be worth way less than what you originally paid for it.
When You Are Ready, A Title Or Installment Loan Can Help
Getting a new car is a big – and expensive – milestone. Whether you’ve decided to lease or buy a car, a title loan or a signature installment loan from Wisconsin Auto Title Loans can be a big help. The process for both loans is easy. Start by filling out our online form and we will give you a call to tell you what else needs to be done. Achieve this milestone with the help of a title loan or installment loan from Wisconsin!
Note: The content provided in this article is only for informational purposes, and you should contact your financial advisor about your specific financial situation.