Cars to Buy vs. Cars to Lease – Which Option to Choose?

Posted on 28 July 2011 by Tony Santos

Buying a car is a lot different from leasing a car. Cars to lease is a modern day option as against cars to buy. To buy a car means that you have to pay for the entire cost of the car or vehicle. You would normally take a loan from a bank and pay them back monthly or buy the car outright if you’re a rich person.

Your monthly payments would include a part of the loan principal amount and interest charges. Over and above this, you would need to make a down payment and also pay sales taxes upfront or cover this in your monthly installments.

Car leasing is rather similar to taking a house on rent, only the responsibility is far greater on the economic front. Cars to lease option gives you the choice of paying for just a portion of the cost of the vehicle. The monthly installments cover the cost of depreciation and the financial charges levied on you by the car dealership, and this is done each month. You have the choice of avoiding a down payment, but your sales taxes are covered in your monthly rentals.

Both vehicle acquiring methods have their own distinct drawbacks and advantages. You must select the most appropriate option for your kind of job. It is advisable to buy a car only if you wish to drive and maintain your own car for a period of five years of more. When you go in for buying a car with the help of a loan, you gain equity in that deal. This can be used as collateral in your business and this also boosts your credit score. As against cars to lease, when you buy a car, you may or may not use it, and there absolutely no restrictions on mileage or maintenance. You can paint or modify your car, add a stereo installation or any other add on, with no questions asked.

Some drawbacks when you buy a car would be that the initial expenses would be rather high. Depreciation also plays a major role. Alternatively, if you need to keep your car for a period of four years, then you would be better off with car leasing. You only have to keep your mileage to 15,000 miles a year. In this case, cars to lease would be an affordable and flexible option. This would translate into lower monthly payments. Additionally, you could drive around in a car you would not be able to afford otherwise. The cost of upkeep is also less. Benefits from taxes are an added attraction. The major disadvantage in car leasing would be that you have to pay penalties if you exceed the mileage or damage the car in any way.

As for choosing between the two, leasing and purchasing are actually two kinds of car finance. And it all depends on which suits you best.

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Categorized | Car News, Car Tips

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