Having a new car is exciting and overwhelming at the same time. The pleasure of owning a car quickly passed. The next thing you have to worry is price negotiations.
Have you ever thought of leasing a car?
In the US, more and more people choose to lease a car due to multiple reasons. So, when it comes to you, what is your choice? Let’s make a comparison then.
Buying a Car
Buying a car means that you actually own it. The car is yours to sell at any time and you are free from any type of fixed ownership period. Also, the insurance premiums are typically lower than if you lease. By owning a car, you’re free to rack up the mileage without worrying about financial penalties or restrictions.
The most obvious downside is the monthly payment, which is usually higher than leasing. Also, you have to pay a reasonable down payment. Depreciation is another worry. Your payments are usually amortized over a four- to six- year period. As a result, buyers with down payments can end up financing a considerable portion of the car and even find themselves in an “upside-down situation,” in which the car comes to be worth less than what the buyer stills owes on it at a given time.
Leasing a Vehicle
When you lease a car, the out-of-pocket cost and the monthly payment is usually lower than buying a car. Leases require little or no down payment, and there are no upfront sales tax charges. Also, you don’t have to worry the depreciation of the car.
For business owners, leasing a car may offer tax advantages if the vehicle is used for business purposes.
By leasing a car, you will never actually own the vehicle. Most leases restrict your mile usage to 15,000 miles per year (sometimes 12,000 per year). If you go over your allotted miles, you’ll pay anywhere between 10 and 25 cents for every extra mile, depending on your lease agreement and the type of vehicle involved.
Also, insurers usually charge higher coverage costs for leased vehicles. However, depending on your age, driving record and place of residence, that additional cost may be nominal.
So what’s your choice for your car? Whatever your choice is, you should make decision based on your own financial situation.