When it comes to deciding whether to buy or lease a new car, there are a lot of factors to consider. The first big question is- what is the difference between buying and leasing?
When you BUY a car, you're making payments on the full value of the car to own once your payments are over. When the payments are over, the car is yours and you can drive it for as long as you want. You can also trade the car in or sell it for value towards your next car.
When you LEASE a car, you're paying for the depreciation value of the car during the lease term. Once your lease term is over, you return the car to the dealership for no value.
On top of those main differences, there are a lot of things to think about when deciding whether you want to buy or lease. We've laid out a few of the questions to ask yourself before making the decision. We also explain some more of the differences between buying and leasing.
What's important to you?
Some of the first things to consider when deciding whether to buy or lease a car are what you find most important about car ownership. Do you like the idea of owning a car and building ownership value? Or do you care more about a lower monthly payment and getting a new vehicle every few years?
When you lease a car, your payments are often lower than when you buy a car, and you may be able to lease a more expensive car than you could buy. However, when the lease is up, you have no equity and nothing to call your own. You can either buy your leased vehicle, purchase a different one, or lease a different vehicle.The low monthly payments may sound great, but unlike with owning a car, you'll always have a car payment.
When purchasing a car, after your loan is paid off, you no longer have a car payment. Your initial payments are often higher, but once they're over, you still have a car that is yours. When you want a new one, you can trade it in for payment towards your next car, or you could sell it for cash. Owning a car gives you a lot more freedom. You can drive as many miles as you want and modify it as you please. However, since most people own cars for long periods of time, major repairs do and can occur. Some things may be covered under Mitsubishi's excellent warranty, but other things will be at the cost of the owner.
Can you predict your mileage?
Are you someone who drives a lot? Or can you predict how much you'll drive in a month's time? If you have a short commute, and don't travel long distances often, then you'll have no problem leasing a vehicle. Leases limit you to only drive a limited amount per year, which is negotiated at the beginning of the lease. The mile allowances are usually anywhere between 9,000 and 15,000 miles per year.
If you're someone with a long commute or who likes to drive, leasing may not be your best option. Buying a car allows you to drive as much as you want, without having to worry about any mile overage charges. Although you can drive as much as you want, your car's mileage does affect its trade-in value which is something that should be kept in mind if you plan on changing cars shortly after your loan is paid off.
Do you like to change cars often?
If you're someone who likes to get a new car every few years, for whatever reason, leasing may be your best option. Leasing allows you to get a new car every few years, because lease terms can be anywhere from 2-5 years and are decided at the beginning of the lease. When you buy a car, the car's loan is your responsibility, even if you decide you want a new car. You can trade in before your loan is over, but it'll make your monthly payments higher because the loan will carry over onto your new car's total as well.
Do you take excellent care of your car?
How well you take care of your car is another factor in deciding to buy or lease. When leasing a car, you have to be careful of excess wear and tear. At the end of your lease, you may be responsible for additional fees for any damage to the exterior or interior of the car. If you're someone who takes excellent care of your car and keeps the interior spotless, this shouldn't be a concern. For things out of your control, GAP insurance is recommended and may be included in your lease agreement to cover the cost of the car should an accident occur.
Wear and tear isn't something you have to worry about when you own a car, because it's yours and you don't have to return it to the dealership in sellable condition. However, any wear and tear will have an impact on your trade-in value down the road when you go to get a new car.
Now that you have a better of idea what the difference between buying and leasing is, you can make the right decision for yourself. Owning a car gives you a little bit more flexibility than leasing does, but leasing may allow you to afford a car you might not be able to buy. Both options have their advantages and disadvantages.
If you have any more questions about the difference between buying and leasing, feel free to contact us at El Cajon Mitsubishi in El Cajon, CA. We have great deals on new Mitsubishi vehicles like the Outlander, Mirage, Lancer, and Mirage G4.