Should You Buy a New Vehicle or Lease It? the Pros and Cons of Leasing

When I sold cars, we had very in-depth sales training. One facet of the car sales business we were well educated about was leasing a car as opposed to outright buying a car. This article is to help pass on what I learned from my car sales training about whether you should buy a car or lease a car. This topic is probably one of the most misunderstood by the general public. There are a lot of misconceptions and inaccuracies about leasing a car as opposed to buying a car. Hopefully, this article will help to clear some of these issues up.

If you're looking for a concrete answer as to whether you should buy or lease your car, there's no way this article can deliver. The reason this article can't give you a clear cut answer is because both options have their pros and cons. Whether you lease or buy your car will depend on numerous factors. Both personal preferences and your financial situation will ultimately be your guide as to whether you should lease or buy your next new vehicle.

The biggest factor in determining whether you buy or lease will be your finances. You need to assess how much car you can truly afford. Being in car sales, I can tell you, most people try to take on too much car, more that they can comfortably afford.

Most everyone wants the best model with every feature. However, you need to be realistic about what you can afford before you even step on the lot. You need to also take into consideration how stable your career or job is. If you've been at the same job for one year, or more, and can honestly see yourself there for another 5-8 years, all the better.

One advantage leasing has over buying the vehicle is the monthly payments you will make. Generally speaking, your monthly payments will be much lower on a new vehicle when you lease it. The lower payments are mainly due to the fact a leased car is almost like a "time share" property. You are only responsible for paying the portion of the car that you use for the duration of the lease.

If you would like to buy your car, instead of lease it, it is advisable you meet the following criteria: You have a lot of money that you can use for a down payment. You should also have money to pay the sales tax. What you can't pay up front can be covered in the form of a loan from your bank or the auto dealership. Of course, your monthly payments will be determined by how much you put down up front and the rate of interest you can obtain based upon your credit history.

If you do want a luxury model with full options, but don't have a lot of money for the down payment, leasing the vehicle may be the answer. As mentioned, generally speaking, the monthly payments will be less than if you were buying the vehicle. The interest rate you pay will be close to the interest rate paid on a financing loan. Another advantage to leasing a car as opposed to buying it is the duration of the monthly payments. Most lease agreements are for 2-3 years. Conversely, most new vehicles that are financed are put on a 5 year payment plan.

Of course, there are drawbacks that come with these advantages. If you end your lease agreement before the contracted date, or default on the monthly lease payment, you can seriously harm your personal credit. This is why it's so critical you are sure that you will be able to consistently make your payments, without breaking your monthly budget.

Leasing a vehicle will also depend on your own personal preferences. You need to understand what a car is to you. For example, some people become very attached to their vehicle. Others just look at their vehicle as a means of transportation and doesn't really let the car define who they are.

If you're the type of person who bonds with their car, and would drive it for 5 years or more, leasing probably isn't right for you. The best course of action for you would be to get the most from your trade and negotiate to the best of your ability to get the vehicle and buy it or finance it. However, if you're the type of person who sees the vehicle as a status symbol, or a mode of transportation and would like to drive a brand new car every two or three years, leasing would probably be a good fit for you.

Another very important factor when considering leasing a car, is the amount of mileage you drive every year. The more miles you drive, the least likely it is you would be a good candidate for leasing a vehicle. You are allotted a certain amount of mileage during your leasing period, usually 12,000-15,000 miles. If you go over that amount of mileage you will pay penalty fees. You will need to ask your sales person how much those fees are per mile. You must also ensure that you keep the car well maintained when you lease it. For example, paint chips, windshield cracks, dents, dings, and poor condition of the interior (cigarette burns, stains, rips, tears, etc...) all can lead to penalty fees. However, if your car is almost as spotless as the day you bought it, 5 years later, you'd probably be a good candidate for leasing.

It's important if you are in the market for a new vehicle to keep your mind open to all opportunities available to you. Most people don't know very much about leasing a vehicle. By reading this article, you now know most than the average person knows about leasing. If you want more in-depth information about leasing don't be afraid to discuss it with your car salesperson. They should be able to answer any and all of your questions and concerns.