There was a time when buying a car meant making payments over the course of a few years and then you would own the vehicle. Leases came along as a selling incentive for those people who would trade their cars in every few years. Offering more affordable monthly payments, people loved the advantages of choosing a lease. However, a lease is not always the right choice. Here are some tips to help you decide whether you should purchase your car or opt for the lower monthly payments of a lease.
Are You a Keeper or a Trader?
The first question you must ask yourself is how long you plan on keeping the car. If you are a keeper who likes to see how many miles you can get on a car before the wheels fall off, then you definitely want to buy your next car. However, if you know that you will want to trade the car in after a few years, then a lease could be the right choice for you.
Watch the Miles Roll By
When you own your car, watching the miles roll by and rack up can be mildly entertaining. If you lease, then this can become a major source of stress. Dealers base lease rates on low mileage levels, so a lease is never a good choice if you have a long commute or do a lot of driving. Going over the mileage limit will leave you facing serious fees at the end of the lease, and constantly watching the mileage during the lease term can become stressful. The bottom line is that a lease is only wise if you know you can stay within the mileage limits each year.
The Reward of Monthly Payments
When it comes to the monthly payments, both options offer certain rewards. If you buy a car, then you can eventually pay it off and enjoy not having a car note at all. However, you can lower your monthly car note by hundreds of dollars if you choose to lease. The downside of leasing is that you will not pay the car off and get to smile as you roll around in a car that is fully paid for.
Bridge the Gap
While leases offer lower monthly payments, they also come with higher insurance expenses. Auto manufacturers offer leases to entice you to return in a few years and pick out another new car. They will guarantee a higher value for the car at the end of the term, but that can become a problem if you ever wreck the car. The insurance will pay only the value on the car, leaving you responsible for the difference between the actual value and what is owed. Invest in gap insurance to protect yourself in the event of a serious accident.
Leases are commonly offered on cars that hold their value better. They can be a great deal if you are interested in a car you couldn’t afford otherwise. However, you should be aware of the potential downsides of leasing. While you will save money on the monthly note, you will never actually own the car and be able to eliminate the note. You will also have to watch the miles and pay extra for GAP insurance. The choice to lease or purchase is a very personal one, and there is no one answer to the question. Some people lease and love always having a new car. Others love the idea of paying a car off, eliminating the car note, and running the car until the tires fall off. The choice is yours, but you should know exactly what you are choosing before you head to the dealership to sign a contract.