Cars: Differences between leasing and buying

If you are shopping for a car, you may have a lot of ideas about the brand, model and color. In addition, you should also consider the way you make payment for the car. You can take a loan, but it requires you to pay $600 per month. However, the same model vehicle can be leased for around $150 less than paying car loan every month. The main advantage of leasing the car is cash flow. Nevertheless, you need to remember that you have to make a monthly payment. Hence, before making a decision, it is worth to consider the differences between leasing and buying cars.


If you buy a car, you need not have all the cash to pay for it. You can finance it by taking a loan. If the price of the car is $25,000, you will need to take out for around $20,000 or more. Then you will need to pay interest for the loan amount borrowed. Leasing a car requires you to pay the amount the car will decrease in value over the period of lease. For instance, the estimated market value of the car is $10,000 in three years based on normal depreciation rate, and then you will need to finance the acquisition price and the remaining value. Leasing the car value of $15,000 will require you to make a monthly payment that is lower than taking a loan for $25,000 even with the shorter term of lease. This is the main reason for why leasing a car is better than buying it.

Another important difference between leasing and buying a car is the former method allows getting the benefit of upgrade. Lease is generally for 2, 3 or 4 years. The cars are fully covered by warranties, so you will not face any problem in driving it. When the lease term is over, you can get to deal in your car for the most recent model. If you take out a loan for five years to buy a car, your monthly payments will stop at the end of five years, but it will be a period before achieving the breakeven point.

 Leasing vs Buying a Car

Leasing vs Buying a Car

 

It is important to consider the amount you need to pay every month and the duration of payment while considering whether to buy or lease a car. Over long period of time, there will be some major maintenance needs, so you should take them into consideration for making the calculation. However, if you are a responsible driver who makes it a habit to service the car regularly, you can take a confident decision of buying a car. With leasing, you will need to make a lower monthly payment and will have peace of mind. You will also have fewer concerns about reliability. With purchase, you need to commit to routine maintenance and control your urge to upgrade to the latest version frequently. 

Lease or buy luxury car- you

Lease or buy luxury car- you

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