In one of our previous postings this month we discussed the complicated matter of shopping for a new car. As personal injury attorneys,we often work closely with individuals who suddenly find themselves in need of a new vehicle. If they do not have rental car insurance (which we recommend), they may need a new car immediately. As was evidenced in our previous post, Hastings& Hastings’ Guide to Buying a New Car, buying a car is a complicated thing. There are so many factors we couldn’t even address them all in one post. Today, we are going to cover additional auto concerns by learning about the pros and cons of leasing versus buying.
Basics of Leasing
Before we get started, it is important to note that every leasing agreement and auto-loan is different, so when discussing the advantages and disadvantages of leasing, we will be forced to speak in generalities. Essential, a lease is a long-term rental agreement. Typically, leasing a car will require a smaller down payment and smaller monthly payments. The operating costs of a leased car tend to be lower than those of a purchased car because repairs will usually be covered under factory warranty. Finally, by leasing you can drive a new car every two or three years.
However, leasing does come with disadvantages. If you continually lease, you will ALWAYS have car payments. You will never outright own a vehicle. Leasing agreements also place a limit on the number of miles you are allowed to drive per year. Excess miles are paid for when the lease agreement ends. Often, you can extend the yearly mileage limits by paying higher monthly payments.
Basics of Buying
Buying a car almost always requires a large down payment. Buying tends to require higher monthly payments as well. However, unlike with a leasing agreement, when you decide to buy a car there is light at the end of the tunnel. Eventually, that car will be YOURS. You will own it. This means you could see a day in which you no longer have to make car payments. You will also be attached to this single vehicle for many years, which comes with its own drawbacks. The cost of repairs and maintenance will be yours alone to shoulder. And these costs can get expensive over time as the car ages. Finally, purchase cars begin losing value the moment they are driven off the lot, a problem you do not face when leasing a car.