- A decision to buy or lease a car can depend on the amount of driving you do.Think about how much you travel during the year. If you commute a lot to work or visit relatives, the amount of fuel and mileage you use can add up. When you own the car, there is no real penalty to driving a lot. Leasing a car has mileage restrictions, however, and you will have to pay overage fees if you go over the number of miles allowed in your contract.
- Think about how much money the money you earn per month and the stability of your job. The financial burden of buying a car ends when the loan is repaid, but lease payments continue as long as you have the car. If your financial situation becomes difficult and you want to get out of a lease, your contract will obligate you to pay a large balloon payment that you may not be able to afford. Vehicle maintenance is also a consideration. It may be several years before it breaks down and becomes too expensive to keep. However, the cost of minor car upkeep may be a good trade off instead of infinite payments.
- If you prefer to trade cars often, you leasing may be the best option. People who use their car purely for transportation purposes may be better served by buying their car. Others who like to customize their vehicle would not like the restriction of a lease. Personal preference is a strong deciding factor.
- People are attracted to leases with the lure of low monthly payments. If the vehicle has a low depreciating value, it can be a good deal. However, a bad credit score can prevent you from getting the best rate (unless you are willing to spend a lot on a down payment). On the plus side, leased cars always have full warranty coverage that covers normal maintenance. You do need to be concerned, since excessive wear on the car at the end of your lease will cost you extra. Another consideration is that leasing a car always requires paying for full coverage insurance.
- Buying a new car is possible for people with good or bad credit ratings (but be careful of long term contracts and high financing rates). Although full coverage auto insurance is required the first year, it can be reduced later, unlike leasing. When you buy a car, warranty coverage on auto maintenance may be limited. You may have to consider a service contract to supplement items that are not covered.
