If you are in the go for having a new car, you might have wondered whether you want to buy it or lease it , will it be cost efficient to buy or to lease etc . Well, here are a few factors to be considered while you are deciding which option to go for and after considering all the facts you can may the decision without hesitation .
The first thing you need to know is how buying a car is different from leasing a car .
The simple answer to this is when you buy a car, it is yours to the full and you own it for as long as you want once you have paid its full cost .
Whereas, leasing a car is not owning it and you need to return it once your lease period is over .
Although according to consumer reports,you may get option to purchase the vehicle at the end of the lease .
The second thing to be taken in note is which one will be more cost efficient and benefit you.
According to consumer reports , if you are buying a car then you are financing its whole cost plus the interest on the loan if you are taking any but leasing will cost less as you are only paying for how much the car’s value is depreciating while you are driving it states Edmunds.
According to consumer reports ,
Upfront cost of buying –
The initial cost of buying a car includes costs like –
1. The cash price if you are paying in full or the down payment
2. Taxes
3. Documentation and registration costs
4. Maintenance costs
5. Other applicable fees .
Upfront cost of leasing –
The typical expenses include –
1. A down payment
2. The first month lease payment
3. A security deposit
4. Taxes
5. Registration costs
6. Other applicable fees
To get an idea of which one will be cost efficient , you need to add up these costs and compare them .
The third and final thing to consider is if there are any potential expenses to consider.
There are some obvious expenses to consider which may include costs like monthly payments , maintenance costs etc.
• Maintenance Costs – Leased cars come under warranty for the duration of the lease period so ,you would only have to pay for routine maintenance like oil change etc. For a purchased car,if the vehicle goes beyond warranty ,you would have to pay for any repairs and also routine maintenance from your pocket.
• Mileage and wear and tear – A lease contract usually includes the number of miles you can drive per year so if you go beyond that limit ,you may be typically charged 15-20 cent for each mile and if there are excess wear and tear, you may be incurred fees at the end of your lease period.
• Ongoing vehicle payments – Leasing a car every few years can be appealing but according to consumer reports, this would result you to pay for a vehicle every month and that too would not have an end however once your purchased car’s bill is cleared, there are no more monthly payments required.
Yes, there are pros and cons to both options and you should decide which choice would help you and would not affect your budget .Thinking through all of it before going to have a car can help you choose what is best for you.