You need to consider your priorities when deciding whether you want to lease a car or to buy a new one. Some make decisions based on their financial capabilities, while some make their purchasing decisions based on their emotions and how much they like a car. It’s best to identify your needs before finalizing your decision.
What is leasing?
Leasing isn’t the same as owning. When you lease a car, it means that you’re renting it for a specific length of time. Typically, the time frame is between 36 to 48 months. When the lease ends, you have the choice to return the car or purchase it for a predetermined price. The price is defined in your lease contract.
When it comes to car payments, lease payments are much cheaper as opposed to monthly loan payments. The latter is calculated based on several factors including the car’s price, the interest rate, and the number of months you intend to pay the entire loan. Car lease payments, on the other hand, are based on the following factors.
- Sale price which is negotiated with the dealer and stipulated in the contract.
- The length of the lease in months/years.
- Expected mileage you can drive per year. The price increases with more yearly mileage.
- Rent charge is a dollar figure and not a percentage.
- Taxes and other fees
Pros and cons of leasing a car
The major disadvantage in leasing a car is the lack of ownership much like when you’re renting a house. You can’t claim ownership of the property or to the car when the lease ends. There’s no way to get a return via trading or reselling. However, there are several advantages to leasing a car.
Lower monthly lease payment
As mentioned earlier, the monthly lease is cheaper than the monthly car payment for a loan. You can even get a newer and more luxurious car if you opt to lease instead of buy.
New car every after few years
The typical lease lasts for 36 to 48 months. After that, you can choose another car or buy the car you’ve leased. Often, people choose to get a brand new car every time their lease ends.
New cars usually have a three-year maintenance coverage. This means that your maintenance is covered the entire time it’s leased.
However, if you’re after ownership and considering long-term financial benefits, then purchasing a car is a better option for you. Many experts don’t share the same vision with people looking out for short-term car plans. They’d rather go for buying a car and maintaining it in an optimal condition for as long as possible.
Regardless of what your choice is, the bottom line is that driving a car is a responsibility. If you intend to lease or buy a car, you also need to consider getting insurance to cover the cost in case of traffic accidents and other unforeseen situations.
If you’re unsure of the kind of coverage you need, you can always reach out to one of our agents. We have professional and expert insurance agents who are ready to explain your options to you. Here at London Insurance Agency, your safety is our priority.