At some point, almost everyone must decide on whether they should lease a car or buy one. After all, it’s not easy being an adult and figuring out how much we can spend every month on car payments, insurance premiums, maintenance, and gas. That’s why most of us are faced with these two options when buying or leasing a car; however, there are pros and cons for both. Which one is right for you? Let’s find out!
What is leasing a car?
The first thing you need to do is understand the difference between leasing and buying a car. When you decide to lease a car, you’re not actually buying the car. You’re paying a certain monthly amount to use the car. There are some benefits of leasing a car: – Lower monthly payments: Because you’re simply paying to use a car and not buying it, you’re going to have lower monthly payments. – Lower down payments: You’ll also have a lower down payment when it comes to leasing a car. – No maintenance: One of the biggest benefits of leasing a car is that you don’t have to worry about maintenance. This is because when you lease a car, you’re responsible for bringing it in for regular maintenance services. – No long-term commitment: Another benefit of leasing a car is that it has a short-term commitment. You can return the car at the end of the lease.
What is buying a new car?
The first thing you need to do is understand the difference between leasing and buying a car. When you decide to buy a new car, you’re purchasing it. You’re paying the car off and it is legally yours at the end of the loan period. There are some benefits of buying a car: – Low monthly payments: One of the main advantages of buying a car is that you have low monthly payments. – No maintenance: If the car is new, you don’t have to worry about maintenance; it’s covered in the warranty. It’s a bonus if you decide to buy a new car. – Long-term commitment: The good thing about buying a car is that there is a long-term commitment. Most people decide on a 36-month loan.
Pros of leasing a car
– You don’t have to commit to a long-term: One of the biggest benefits of leasing a car is that you don’t have to commit to a long-term. You can simply turn in the car at the end of the lease and walk away. – No maintenance: Another positive is that you don’t have to worry about maintenance. You can simply take the car to the dealership and have them take care of it for you. – No long-term commitment: Leasing a car is a short-term commitment. You can walk away from it at the end of the lease. There is also no real risk because you’re not technically paying for the car. You’re paying to use it.
Cons of leasing a car
– You commit to a long-term: One of the biggest cons of leasing a car is that you commit to a long-term. You have a set amount to pay each month and you must stick to it. – No equity: Another con is that you don’t walk away with any equity. When you buy a car, you get equity. You can use the equity to get a home loan or fund your retirement. – You must pay taxes: One of the biggest cons of leasing a car is that you must pay taxes. When you buy a car, you don’t have to pay taxes.
Pros of buying a new car
– You walk away with equity: One of the main advantages of buying a new car is that you walk away with equity. You can use that equity when you decide to sell the car or if you want to take out a loan. – No maintenance: Another pro is that you don’t have to worry about maintenance. The manufacturer has a warranty of up to a certain number of years and miles. – No long-term commitment: Another pro of buying a new car is that you don’t have a long-term commitment. You’re not committing to a lease. You’re paying it off. – Tax benefits: When you buy a car, you can deduct the interest on your taxes. You can also write off the car’s gas, maintenance, and insurance.
Cons of buying a new car
– You must pay taxes: One of the main cons of buying a new car is that you must pay taxes. You can deduct the interest and write off the car, but you must pay taxes on the initial amount. – You must pay cash: Another con of buying a new car is that you must pay cash. You can apply for a loan, but the interest rate will be higher. – Your credit score will be impacted: Another con of buying a new car is that your credit score will be impacted. When you apply for a loan, the lender will check your credit score.
Key Takeaway
When you decide to lease a car, you’re not buying the car. You’re paying a certain monthly amount to use the car. There are some benefits of leasing a car: one of them is that you don’t have to commit to a long-term, no maintenance, and no long-term commitment. On the other hand, there are some cons to leasing a car: you commit to a long-term, no equity, and you must pay taxes. When you decide to buy a new car, you’re purchasing it. You’re paying the car off and it is legally yours at the end of the loan period. There are some benefits of buying a new car: one of them is that you walk away with equity, no long-term commitment, and no maintenance. On the other hand, there are some cons to buying a new car: you must pay taxes, you must pay cash, and your credit score will be impacted.
