What is the major difference between purchasing a car with car loans and leasing a car? Why lease? What can I get in terms of financing?
Let’s take a look at a basic comparison of a lease vs. buying a used car, convertible cars for sale.
Purchasing used car vs. leasing used car
When you buy a car you get to decide when to take possession of the vehicle, for as long as you need it. If you are a “good credit risk” (a good driver with solid credit) and your credit report is good (clearly you have been paying off bills on time) you might be able to get a lower interest rate and get the car for free.
A car lease gives you a vehicle to operate for an agreed-upon number of months. And if you default on payments, you can be held liable for any damage to the vehicle or other financial repercussions. If you default on payments, the lessor (finance company) may go after you for the full amount you owe.
A lease might offer a lower monthly cost (i.e. the more days you make the payments, the less you will pay per day) However, it’s also possible that the more days you make the lease payments, the more you will pay for them. What if you are in an accident and need to make repairs to the car? A lot of car dealers will offer an extended warranty plan that covers the repairs for a set amount of time (usually 2 years) – which will cost you even more money each month to make sure the repairs are covered.
If you buy a car you can choose the vehicle and if you have financing that vehicle can be in your driveway within 2 to 3 weeks. You will also have the opportunity to sell your vehicle if you want to.
If you look at a used car, you’re usually looking for the value of the vehicle, not the cost of operating the vehicle. You’re also looking for the best-used car value and the best value in the market.
The problem with buying used is you’re not getting an extended warranty, you’re not going to be able to sell your vehicle as fast, and you’re not going to get as much money.
If you look at a lease you get the car, you get the warranty, and the manufacturer can tell you what needs to be done so you can repair it.
Buying vs. leasing is just one of the questions you need to ask yourself before making your decision on whether you should buy or lease.
The bottom line: lease vs. buy a car question
If you’re going to lease a car and not own the car in the future, you need to make sure that it will fit your budget. Do you have money to pay each month? Is that money going to a service repair bill? Is that money going to your vehicle maintenance?
If you want a car that’s reliable and maintainable, you’re going to want to look at a lease.
There are times when leasing a car makes sense. If you can’t afford to buy a car and you are willing to take on some of the monthly payments, leasing is a great option.