4 min read
Car prices have never been higher. Right now Americans are paying record prices for new vehicles. Even second-hand cars are shooting up in price. The car market is hot. And if it’s feeling a little too hot, you might consider leasing instead of buying.
Leasing a car is a bit like renting. You put down a deposit and get the car for a fixed period of time, paying a fee each month. You could lease a car for as little as a couple of months, but usually a contract will be for 24-36 months. It’s a great way to upgrade your ride without needing a stack of cash. But is it worth it? Let’s take a look at buying vs. leasing
benefits of leasing
more bang for your buck
Compared to loan repayments on a new car, the monthly payments are usually lower. The deposit is usually less than a down payment too. So even with a smaller budget you could get behind the wheels of a flashy new drive.
no resale worries
All cars depreciate in value (in truth, they’re not a great investment) and leasing takes care of that problem for you. When the contract ends, you can simply return the car and get an upgrade.
possible bonus buyout
There is often the option to buy the car at the end of the lease. You might be able to negotiate a good price, as you’re saving the lessor the hassle of finding a buyer.
disadvantages of leasing
it’s not your car
Because you won’t own the car outright, you’ll have to navigate restrictions set by your lease agreement, such as limits on the mileage (and fees for exceeding it). You also won’t have any equity on the vehicle if you decide to buy a new car.
you’re locked in
If your circumstances change and you need to break the contract early, you’ll also have to pay a fee.
long term costs
Leasing a car for a long period of time can mean paying much more for a vehicle than you would if you buy it outright. You should weigh up the short-term savings against the long-term costs to figure out if it's really worth it.
benefits of buying
It’s yours!
You own the title to the car (whether you buy it outright or with financing), which means no limits on the mileage, or being locked into a contract. Coast-to-coast road trip? Heck yes. Want to trade it in for a different model? Go for it.
more economical
If you’ve got the cash to spare, then buying a car outright is often the best financial choice in the long term.
disadvantages of buying
big downpayment
If you’re getting financing for your car then there’s a good chance there will be a higher down payment than the deposit is for leasing. The monthly payments will probably be a little higher than a lease arrangement too.
depreciation woes
As we mentioned, cars lose value quickly. If you own the car outright, you’ll have to swallow any losses if you decide to sell it.
resale hassle
If you choose to buy a car instead of leasing, eventually you’ll have to deal with the resale or trade in yourself. Selling a second-hand car can be a real bore (though we do know about one option that’s definitely hassle-free…)
Whether you plan to lease or buy a new car, you’ll likely want to get some $$$ for your old one. Peddle can buy your used car on the spot, leaving you to make your next move with confidence.
