Deciding Whether I Should Lease or Buy

Deciding whether to lease or buy your next vehicle is an important decision that you’ll have to live with for the next few years. Carefully consider the positive and negative points before you sign the papers.

Tutorial

There are advantages to both leasing and buying a vehicle. When you lease a car, truck or SUV, you know that you’ll probably never pay that vehicle off. At the end of the lease term, you’ll likely be given the option to purchase though most people don’t. However, the biggest benefit of leasing for most people is that at the end of that lease agreement, you’ll likely be getting a new car and start over with another lease term.

Basically, a lease allows a person to “rent” a vehicle for a specific amount of time. During that time, the person makes monthly lease payments that are similar to a monthly car payment. At the end of the lease term, you pay a balloon payment to keep the car or turn the car back in and start a new lease on another car. The downside for most people is that it’s a perpetual car payment – you never have a time when you aren’t making that monthly payment. With a purchase, you would eventually pay the car off. A lease may also require a sizeable down payment and the amount of that payment should be considered when deciding whether the car is worth the cost.

A lease also eliminates the possibility to customize the car. Adding anything that can’t be simply removed at the end of the lease is usually prohibited by the terms of the lease.

There are usually some additional terms to the lease that require the holder of the lease to have regular maintenance performed. That maintenance cost may be included in the lease so there’s no charge for the routine things like oil changes. Often, the number of miles that can be driven is also limited. If you drive more than your allotted miles, you’ll be charged for that additional driving time.

Sometimes, the credit requirements for a lease agreement are less stringent than for purchase and you might find that you qualify for a lease when you can’t qualify for a new car purchase.

Remember that different terms and conditions will apply to different situations. The only way you can be sure of all the regulations that will be included in your lease is to talk to the leasing agent and then carefully read the contract.