It depends on what you want.
Leasing means you are only paying for the depreciation of the car. While true depreciation is hard to predict, they basically "guess" what the car will be worth at the end of your leasing period and you pay for the difference. After your lease is up, you walk away. You get no money, but you pay no additional money for the car either.
Leasing typically is good if you enjoy getting into a new car every 2-3 years, and you aren't planning to do any modifications to the car.
Advantages of a lease: You won't be upside down on your loan, you have a set number of years you will own the car, then get rid of it for a newer model. Most leases are almost the same duration as automotive warranties on the vehicle so any major car problems will typically be covered by the warranties during your leasing period.
Disadvantages: You don't own the car. You won't build equity in the car (though most people never do). You must have full coverage insurance. You are limited to the number of miles you can drive. Of course if your smart, pre-purchase miles before hand typically at half the price of paying the penalty afterwards. (But you'll need to estimate your total miles driven per year)
Financing a vehicle is good typically if you plan to drive the car for a long time. If you plan to keep the car until you run it into the ground, definitely purchase the car.
In financing you are going to be paying for the whole car. Most people get into trouble because they make their monthly payment, but the car depreciates faster than the payments they make. Those that want to trade in their cars after 3 years find that they actually owe more on the car than what the car is worth, then end up paying thousands more when they get the new car. The negative equity is typically rolled into a new loan, and people don't ever truly realize how much money they've lost! Many people have several thousand dollars rolled over into their next car loan.
Advantages of financing: The car is yours when you are done paying it off. You only need full coverages while it's financed. Once you're done paying it off you can save some money by going to liability only coverages. You can make modifications to your car, including tinting windows, adding headers, turbo charging, super charging etc. UNLIMITED mileage! The car is yours so travel as you please with no worry of mileage overage charges.
Disadvantages: Lots of people have negative equity on their car when they trade it in and it may have been smarter if they had leased.
Most give this rule of thumb. If you plan to keep the car less than 3 years and you can pretty accurately predict your mileage usage, lease the car. If you plan to keep the car longer than 3 years or your mileage changes yearly, purchase.
2007-07-12 10:21:27
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answer #1
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answered by hsueh010 7
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Depends a lot on whether you actually want to own the car. By financing, you will pay for it on a monthly basis, typically for three, four, five or six years; at the end of the payment period, it is your car to have and to hold from this day forward ...Ooops! Sorry! At any rate, you now own a used vehicles which may be six or seven years old.
By leasing, you again make payments, typically for two, three or four years, but you don't gain any equity in the vehicle. At the end of the period, you simply turn it in (and pay any overages for mileage and damage) and swap it for a new model OR you can make a "balloon payment", which will allow you to own it.
If you're like most people, who like to own the lastest and greatest, go with the lease. If you'd rather actually own something for your money, go for the financing.
I hope this helps. Good luck!
2007-07-12 17:20:07
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answer #2
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answered by Kiffin # 1 6
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Hi,
Automotive.com (link below) has a nice article on how to best determine which option is best for you.
Typically, leasing is the most expensive option over the long-haul. Often, people choose to lease if they want to drive a nicer car than they could afford to buy outright.
Other things to consider --
1. When you lease a car you don't own it. The leasing agency does.
2. Monthly payments are higher when you buy the car. This is because when you lease, you're only paying for "the vehicle's depreciation during the car lease term, plus rent charges (like interest), taxes, and fees. "
3. Leasing gives you the option to "walk away" when the lease is over.
4. A leased car often has stipulations as to how many miles you can drive per year. There are stiff penalties if you go over that amount (e.g. $0.45 per mile).
Consumer Reports (link below) offers a handy chart for readers to compare further differences.
good luck!
Mike
2007-07-12 17:42:15
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answer #3
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answered by Ask Mike 4
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finiacing is usually better long run, because your paying towards keeping the car. After the first couple of years of payments you paid the interest off and your paying towards the car, why lease and give it back up when you can just continue paying then own the car. You can lease to buy, but your better off just finiancing.
2007-07-12 17:16:54
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answer #4
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answered by Saddler 3
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