Buy or Lease, the decision is yours?

This is the classic consumer dilemma that faces everyone in the market: Do you pay cash upfront or forego the ownership and decide to pay monthly settlements instead?

So do you buy or lease to get a new vehicle?

There is no clear cut answer to this dilemma.Each dilemma has its own advantages and pitfalls, and it depends on a number of financial and personal elements.

Firstly, your finances. Affordability is a main focus, and you need to look at how stable your job is and how healthy is your financial situation on the whole.

Short-term, the monthly-cost of leasing is significantly lower than the monthly payments when buying: you only pay for“the portion” of the vehicle’s cost that you use up during the time that you are leasing it.

If you have a large amount of cash that can be used upfront, then you can opt to pay the down payment, sales taxes - in cash or rolled into a loan - and the interest rate determined by your loan company. Buying will give you ownership of the car and that feeling that you now own the vehicle.

If,for example, you want to get into luxury models but you are unable to afford the upfront cash of purchasing the vehicle than you’re in a good position for car leasing short term. 

Unlike buying, this gives you the option of not having to pay out the hefty down payment upfront, leaving you the option to pay a lower money factor that is generally similar to the interest rate on a financing loan.

However, these benefits come at a price: terminating a lease early or defaulting on your monthly lease payments will result in harsh financial penalties and will ruin your credit rating.

You need to ensure you budget the monthly lease payment into your finances for the foreseeable future, or at least for the duration of the lease. There are thousands of places which offer the best car leasing tips, search around and you will find some gems of information. 

Besides the financial aspect, making a buy or lease decision depends on each individual particular lifestyle choices and preferences.

You need to think about what the car means to you: are you the sort of person who bonds with the car or would you rather have the excitement of something new once in a while?

If you decide you want a car for more than five years, negotiate very carefully and buy a car to suit your needs.
If, however, you don’t like the idea of ownership and prefer to drive a new car every two to three years then leasing is the best option for you.

Next, take into consideration your transportation needs: such as how many miles do you drive a year?

Do you maintain your cars properly? If your answer to this is: “I drive 42,000 miles a year and Im am not really bothered about my cars as I don’t mind dealing with repair bills”, then you’re best option is to buy. Ask your local car leasing companies for as much information before you make any car leasing decisions.

Leasing is mainly based on the assumption of limited-mileage, which is usually no more than 12,000 to 15,000 miles a year, and wear-and-tear considerations.

Unless you ensure you can keep within the prescribed mileage limits and keep the car in a good condition at the end of your lease, you risk incuring hefty
end-of-lease costs.