TO LEASE OR NOT TO LEASE
QUESTION: I have conflicted feelings about purchasing vehicles because I feel that after a few years I am wishing I could have the next best thing. I am considering beginning to lease cars instead of purchasing but have heard that doing so allows you very limited mileage. Is this true and do you think leasing would be the right choice for me?
ANSWER: You will be very happy to know that in fact leasing is the perfect solution for you! Many people share your feeling of always wanting the next best thing in a vehicle and they find themselves frequently buying and selling cars. The problem is when you first purchase a car it immediately becomes a pre-owned vehicle, which sets its price point way down. The next factor to consider is the mileage. You said you were concerned that leasing a car in fact costs more for each mile. This is not the case. If you own the vehicle then every 1000 miles you put on it, substantially brings down the selling price.
If however you choose to lease the car, then you are truly only paying for the use you get out of the vehicle and not loosing a large amount of money for what you have not used. When you sign a car lease you can prepay and sign up for exactly the amount of miles you want to use. This way nothing is unexpected. In addition when leasing all of the extra costs in purchasing a vehicle like mechanical expenses and warranties are not a factor. If you have a problem with the vehicle you simply bring it back into the dealership and the repairs are covered. You don’t have to worry about a warranty because you know when the lease is up you can either give the car back or buy it at a reduced price. If you choose to buy the vehicle then you have only paid for your use and can purchase it at the reduced price so you truly get the best of both worlds!
I understand the feeling of always wanting the new and hot thing on the market. As fast as technology is moving and trends are changing it is understandable that some people feel as if their new car is outdated after just a few years. So save yourself the money, the hassle and the regret of making this big purchase and lease your next vehicle.
PROS OF LEASING
- Only pay for the miles you use
- All repairs/ expenses covered
- Buy car at lease end for discounted price
- Have the top of the line model each time it comes out
CONS OF BUYING
- Monthly payments are higher than leasing
- Value greatly depreciates right after you purchase
- Buying a car with a loan is like putting money in a declining value savings account!
For a more comprehensive list of advantages and disadvantages of leasing, please visit the Federal Reserve Board’s comprehensive article “Keys to Vehicle Leasing” >> Visit Site