Everyone wants to own a personal car to save regular transportation cost. Buying a car is an important financial decision to buy a new car for you because it is major financial commitment. There are two ways to own a car, one is to buy on full cash if you want to make your equity and other is to get it on lease. Buying and leasing both are two major options to get a new car and both ways have their own benefits and drawbacks. While buying a car, you have to pay full purchase price in form of check or cash. You can also get a car via long-term financing through a bank or automaker’s financing arm. Lease is a long term rental agreement in which driver is responsible to make monthly payments for a period of around three years. At the end of the lease period, the driver should return the car to the dealer.
Similarities of Buying and Leasing
There some common things in the buying and leasing of a car especially in case of long-term financing. In both cases, driver makes a down payment which is usually subtracted by the dealers of the car before computing monthly payments. In case of lease the drivers should make monthly payments for the purchase or lease in order to avoid late penalties and possible repossession of the vehicle.
Benefits and Drawbacks of Buying and Leasing
Buying a car means you are building equity for you and the buyer will definitely owns the car after the end of payment term.
People who get car on lease can drive a relatively new vehicle always but they cannot get ownership for their car and cannot sell or trade their vehicle. Leases come with mileage limit and drivers who exceed the limit usually between 10,000 to 15,000 miles in a year have to pay additional mileage fees.
Here is preview of a free Buy Vs. Lease Car Analysis Template created using MS Excel,
Costs of Leasing and Buying
In leasing and buying a car, the same vehicle is available for buyer and leaser with two different price tags. Auto dealers include a buyout price in each lease agreement that allows the driver to purchase the car at the end of the lease. This amount can be comparatively higher than a fair market value of the car at that point. Buying a car can be less costly in long run as compared to lease but in this way you have to drive the same car for longer period of time.
Lifestyle of Buyer and Leaser
Decision of buying and leasing a car can be based on the financial status and lifestyle of driver. People who want to drive a new and stylish car every year have to afford heavy cost of lease.
On the other hand, if you are satisfied with the same car for extended period of time and want to build equity then you can buy a car instead of taking it on lease. It will be beneficial for you and save additional cost.
Here is download link for this Buy vs Lease Analysis Template,