Leasing Vs Buying a Car
Choosing whether to buy or lease a new car is a big decision fraught with lots of misconceptions that can be especially troubling for first-time drivers. At Southgate Honda, two questions we get asked often are what is leasing and is leasing a car a good idea?
Leasing
In simple terms, leasing allows you to drive a new vehicle without paying a large sum of money or taking out a loan. You simply have to make a small down payment, followed by monthly payments for the duration of the lease, and you can return the vehicle when the term expires. If cruising down the highway in a brand-new car every three years is your thing, a lease would definitely be your best option.
Buying
Buying a vehicle means it becomes your personal property, while with leasing, you are simply "borrowing" it and paying for the depreciation it incurs in your possession, including interest and fees. At the end of your lease, you can return the vehicle or purchase it for the residual value. Here are a few pros and cons to leasing and buying that might help you decide how to pay for your next car.
Leasing
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You can drive a new vehicle every few years.
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You get to drive a more expensive vehicle for less money.
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There are no trade-in hassles at the end of the lease.
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Your vehicle will still be covered by the manufacturer’s warranty.
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Your car will have the newest safety and convenience features
Buying
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Your car expenses will be lower in the long run.
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You own the vehicle and can sell it whenever you want.
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You have the right to customize your car to your taste.
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There are no unexpected mileage penalties for increased driving.
Is it better to lease or buy a car?
There's no easy answer to whether it is better to lease or buy a new car, and each method has its pros and cons. While you get lower monthly payments with a lease, you don’t own the vehicle and have no equity towards a down payment on your next vehicle. Also, lease agreements have mileage limits, and you are required to keep the vehicle in near-showroom condition throughout your lease. Buying a car outright or via financing is a more expensive option, but once you pay off your loan, you can use your equity towards purchasing a new car.
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