Financial Tips

Need A New Vehicle? Should You Buy Or Lease?

You’re ready for a new vehicle, but should you buy it or lease it?

It all depends …

If you want to own the vehicle once it’s paid off and you don’t want to worry about mileage limitations, then buying might be right for you. But if you always want to drive a newer SUV, truck or car and have a lower monthly payment, then leasing might be the way to go.

When you lease a vehicle it’s likely you’ll always be covered by a warranty – which saves money on repairs – but your mileage will be limited and you’ll pay extra for each mile if you exceed that limit. You’ll also have to return the car at the end of the lease – and if you always lease, you’ll always be making a monthly payment.

When you buy, you’ll need to make a down payment and pay off the entire loan, including interest and sales taxes on the full value of the vehicle, and those payments usually are higher than lease payments. You’ll also be responsible for repair costs after the warranty expires. But once the vehicle is paid off, your payments will end and you’ll have equity in it when you decide to sell or trade for something different.

Expenses associated with buying a vehicle will include its final cost, taxes, registration, various fees, a down payment and interest costs. When leasing, your payment is based on vehicle depreciation over the lease period, registration and various fees. When leasing, you might need to make a down payment, and may also face wear-and-tear costs when you turn it in at the end of the lease. And breaking a lease for any reason can be costly.

Before you make any decisions, you should ensure you could afford the monthly payments and any insurance or other costs. You will also want to ensure that your credit rating is good so you can qualify for the best interest rates or lease options available.

Don’t ever be afraid to ask a financial professional for advice or to explain things.

Once you’re comfortable with your choice, it’s time to arm yourself with as much knowledge as possible and to negotiate the best deal you can – whether you lease or buy.