Buy Vs. Lease
Is a Lease Right for You?
Buying and leasing both have advantages, it’s similar to buying or renting a house. Most customers make the decision based on the monthly payments and how long they plan to drive the vehicle.
How long did you keep your last vehicle?
If you purchase new vehicles frequently because of the latest styles, technologies, or your preferences a lease may be a good option for you. Leasing a car allows you to get a new vehicle more often.
How much do you drive?
A car’s mileage affects it’s resale value. If you drive more miles than the average American driver (12,000 per year) a lease may not make sense. Leases most often come with a limit of 10,000-15,000 miles per year and a fee per mile for additional miles driven.
Are you driving the vehicle for business?
If you are driving your vehicle for business a portion of the car’s depreciation and lease payments can be deducted on your taxes. If you want to learn more about the business vehicle tax deduction, check with your tax adviser.
Are you concerned about your vehicle losing value?
If you typically trade in your vehicle for a new one before it is paid off, leasing is a good option for you. You don’t have to worry about resale value with a car lease. If the value of the vehicle drops when you are leasing it doesn’t affect you. If on the other hand the vehicle holds its value better than expected, you will be able to buy the vehicle at the end of your lease.
Are you looking for a lower monthly payment?
Leasing offers a lower monthly payment when compared to financing with the same loan terms. Instead of putting your cash into a car that depreciates, you can invest your money into something that appreciates. If you need access to more cash every month – leasing is a good choice. Car leases also do not usually require a substantial down payment.
Do you want to pay less tax?
When you lease a car you pay less for sales tax. When you purchase a car you pay sales tax on the total amount up front or rolled into your loan. When you lease you pay sales tax only on the portion of the car you finance.
Do you try to avoid car maintenance and repairs?
With a 3 year lease your vehicle is under warranty and the factory will cover the cost of most repairs. Not to mention that a brand new car is unlikely to have dead batteries, or need costly repairs.
What’s the same?
You will need to pay your state’s licensing fees, and you still need to purchase car insurance to cover theft and damage. GAP (Guaranteed Auto Protection) insurance is available with most leases to protect you if the car is totaled.