Buying vs Leasing in 2013

The freedom to have a vehicle is one Americans enjoy a lot. It is typical that the average household has 2-3 cars or more. People enjoy having the ability to go where they want to, and to haul whatever they want. But one debate that still stirs among car buyers today is whether to purchase a car or to lease it from a dealer.

When you purchase a car usually there is financing involved and a monthly payment is made for 3-6 years. But at the end of the loan payment time, you own the car outright. When someone leases a vehicle they also make a monthly payment, but usually only for 1-3 years and the payment is not as high as a loan note. However, you still have to pay for repairs and up keep, and each dealer has their set of lease rules that can cost too. Like excess wear and tear, or mileage that exceeds the lease agreement terms.

One of the main reasons why people lease a vehicle is because they are able to drive a newer car every few years and they don’t have to worry about the hassle of financing. And driving a new car every couple of years isn’t always about just wanting something new for the sake of having something new. If you have a family, or a loved one with special needs you may want a vehicle that is as up to date as possible because of safety features, or technological advancements. If you travel a lot for work or personal reasons then having a new and more reliable car can also be extremely important.

For some the temptation is the thought of the new car, for others it may be the initial savings when you first get the car. But even with the lure of a new or cheaper vehicle, some people prefer to finance their car. If you purchased a new Chevy Equinox from a dealer, you would be paying a little over $400 a month, whereas if you leased it somewhere it would only run around $300 a month. The big difference though is when you finance a car you are making an equity investment where you will own that property at the end of the loan allowing you to keep it, sell it, or trade it in for money on another car.

When you lease a car you have to watch out for the extra costs. For instance, most leases only allot for around 36,000-45,000 miles to be driven over a 3 year period and the extra miles can cost $.05-.20 a mile. If you drive just 1,000 extra miles a year you will owe an additional $1,800 when you turn the car in. Also, your car insurance premiums will likely be higher to cover the cost of gap insurance, in case the car is totaled while you are leasing it. So although, the initial price tag may be cheaper, and the maintenance costs lower in the 3 years, you can still add on extras that will cost more in the long run and you won’t have the equity to trade on at the end.

Both purchasing and leasing a car is a viable option. The question is simply which one is right for you. If you don’t plan on driving too much and like newer cars, then leasing from Klick Lewis Cars could be the way to go. But if you use your car a lot, and may want the investment payoff later down the road, then financing may be the best option for you.

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  1. Thanks for the breakdown! I can say I really didn’t understand why people leased cars before reading this. I still don’t think it’s something I would do, but I get it now.

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