When it comes to getting a new car, it can be easy to only dream about its beautiful exterior design and model. Our imagination is spent picturing what it will feel like to drive off the lot with a sparkly new or used car. But what if the type of purchase made on the lot had as much-and if not more-of an impact on the overall satisfaction of your purchase? If you’ve wondered whether leasing or buying a new car is the right move for you, there are a few key things for you to consider before making this kind of commitment.
Don’t Start Blindly
Unfortunately, it is not uncommon to let the excitement of buying a new car derail the buyer from preparing and making an informed decision about their purchase. Don’t walk into your car dealership sparkly-eyed and blinded. To avoid getting pulled into a situation on the lot that you were not prepared for, it’s essential to sort out whether leasing or buying a car is the right for you.
Three Main Factors
There are three main factors that should be leading your decision between leasing and buying. First, identify the mileage you plan on using with the car. Will you be taking it on long road trips for work and vacation or will it primarily be used for short work commutes and local trips? Secondly, how much money can you spend on a car? Consider the cost of insurance, maintenance, gas, and a down payment. With all these things considered-can you afford to pay more for payments each month or less? Lastly, identify the purpose of the car. Will you be expecting a high or low amount of wear-and-tear to the car for reasons such as work or moving locations? Or will it simply be used for driving from one place to another?
Positives of Leasing a Car
Leasing a car may be the best option for you if you find yourself in a few of the following circumstances. First off, if the long-term commitment of buying a car is not in the cards for you right now, leasing may be your answer. Usually, cars are leased for 3 years at a time-or the equivalent of 36,000 miles. When the lease is up, the car is returned and it is no longer your responsibility.
The next benefit of leasing a car is having a warranty during the entirety of your lease term. This will be a financial buffer for unexpected issues that may come up with the car during the term of your lease. Additionally, the down payment for leasing a car will be lower when compared to purchasing a car. Lastly, the monthly payments for car leases are almost always lower than monthly payments for a car that is bought.
Positives of Buying a Car
Though leasing a car may seem cheaper upfront when monthly payments are compared as well as the down payment, buying a car is often far more cost-effective in the long run. A great benefit of buying a car is that car payments are only a short-term reality. Once the car is paid off, it’s fully owned.
Because the car can be sold or traded when it’s paid off, the owner can make significant money on the car after they’re finished using it. An owner also will not have to worry about the cost of wear and tear or any mileage limits. Owners have the freedom of making their own decisions as to what their car will be used for. Those who lease a car do not have this freedom.
The Impact of Your Credit Score
Similar to purchasing a home, a good credit score can go a long way in avoiding high-interest rates or even worse-rejection from a dealership on a loan or lease. Aiming for a credit score between 680-739 will help you lock in a great deal on a car purchase or lease.
What It Boils Down To
Considering the primary uses for a future car and the budget you’re able to afford will help you make a well-informed decision between buying and leasing. In no time, you’ll be off the lot with not only sparkly eyes, but a great car that fits your individual needs as well.
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