You decide to get a new car. The question: should I lease or buy? There are pros and cons to buying or leasing. How do you make that choice, and which choice is better for you? Here are some things to think about before you decide.
- Ownership – With a purchase, you will end up owning the vehicle after it is paid off and you can choose how long to keep it. With leasing a car, you will have to give it back at the end of the lease, unless you decide to purchase it. If you’re the type of person that enjoys a new vehicle every year or two, leasing may be the better option for you.
- Monthly Payments – Purchase payments tend to be higher than lease payments because you pay for the entire value of the car. You also pay interest, fees and other hidden costs. With leasing, the payments are usually lower because you are only paying the vehicle’s depreciation during the lease term.
- Mileage – With a purchase, you can drive your car as frequently, and as far as you want. Your only risk is reducing your retail value with excessive mileage. On a lease, you are limited on how many miles you can put on the car during the term. In most cases, you can only put on between 12,000 to 15,000 miles per year. Depending on where you work, a lease could cause some issues. If you exceed the set mileage of your lease agreement, you will be subject to additional mileage fees that may be costly.
- Future Value – With a purchase, you’ll eventually repay the car in its entirety and the vehicle will be yours. outright. When you decide to sell it, or trade it in, the retail value will be paid directly to you. On a lease, the future value doesn’t affect you financially. That also means you don’t have any equity in the vehicle.
These are some of things t0 consider when deciding to lease or buy. Here at SourceONE Credit Union, we CAN’T assist you with a lease, but WE CAN help with a purchase. We offer car loan rates as low as 1.99% on new vehicles, and 2.99% on used autos. Our rates are highly competitive and we will beat our competitors 90% of the time. If you’re in the market for a purchase, visit our website, or call our office at 312-922-0495.
Here’s a bonus tool from Bankrate: Buy or Lease Auto Calculator