Essay

College Essay Tips – Leasing Vs Buying a Car Pros and Cons

Auto Lease or Car Leasing

An auto lease or car leasing is a financial arrangement that enables an individual to obtain a vehicle without paying for it entirely. They get access to a car for a certain term and then return the vehicle at the end of that period. At the end of the lease, the lessee can return the car.

Buying a Car

For most of the people buying a car is the second most expensive type of purchase they will make in their lives. Going about purchasing a vehicle requires making a big decision. Even if you are planning to buy a used car which will likely cost less.

Factors to Consider When Leasing a Car

Vehicle Cost

One of the question you may ask yourself before leasing a vehicle that how much the vehicle cost. Since you will be making monthly payments every month for a few years, knowing the total amount you will pay for the life of the lease is very important.

Cheaper vehicles will usually have lower monthly payments compared to expensive ones. Always pic a car with affordable monthly payments.

Vehicle Residue Value

A vehicle residue value is the car’s value at the end of the lease. The residual value is also the amount you would pay for the vehicle if you chose to buy it back at lease end. The manufacturer always provides residual value as a percentage.

Vehicles with a higher residual value will amount less depreciation cost. Hence a lower monthly payment compared to cars with a lower residual value.

Fees and Taxes

Acquisition and disposition fees can always be negotiated at the lease-end. Many manufactures will waive the disposition fee if you get another vehicle from them after turning it. The monthly payment advertised is usually before taxes, fees and registration cost.

Factors to Consider When Buying a Car

Look for Real Reviews

The internet has made it easier to research and gather real-time data. It is always best to see what customers have to say about the local car dealer. And it is easy as a click.

Look at the pros and downsides of the dealer. Read thoroughly what a customer wants to say. Make sure the company you are choosing offers a car history as well.

New Care or Used Car

So you have narrowed down on the vehicle that you want, and you are comfortable with its pros and cons. The second question you need to ask yourself is, do you want a brand new car or do you want a used car.

This also requires research to understand the difference between buying a brand new car or buying a used car.

Budget

The most important thing the account should be considered before buying that will make you easy to get the car. Cars are not cheap, so you should have a proper plan.

Before buying a car, you should save money, or you could consider getting a loan.

Is it Better to Buy or Lease a Car?

There is no particular answer for whether it is better to buy or lease a car. Each method has its pros and cons. While you can typically get lower monthly payments with a lease, you never really own the vehicle.

Leas customers are subject to strict mileage limits and must keep their car in near show-room condition throughout the lease. At the end of leas, you have no equity to use toward a down payment on your next vehicle.

Buying a car is naturally more expensive since you have to pay the entire purchase price of the vehicle. Hence you have paid off your loan the end of your payment. In many cases, your sale taxes are higher with the purchase than a lease.

Pros of Leasing a Car

New Car, All the Time

Leasing a car means you always get to drive around in a new ride. If you love the car and going this is a big perk.

Leases Are Tax-deductible for Small Business

If you are self-employed or you own a business, you can write off your lease as a business expense.

Lower Monthly Payments

A typical car lease payment can be significantly more down than your monthly payments would be if you were purchasing the same vehicle and financing it with a traditional personal auto loan.

Cons of Leasing a Car

Liability for Payments

If you lose a job or facing financial problems and can’t afford the price anymore, the dealership will recover the car and sell it on auction.

Can’t Claim the Vehicle as an Asset

You can’t claim a car as an asset. It is technically still an asset of a dealership that leased it to you.

More Expensive to Buy After Lease

If you decide to take the option to buy a car at the end of the lease term, you will have paid much more than the coast of the car even if you have financed it.

Pros of Buying a Car

Warranties

Most vehicles come with a manufacturer warranty that on average covers three years or 60,000 miles. It is also common for a car to go with a ten-year warranty.

Latest Technology

Some benefits of the newest technology are lane departure warnings, collision avoidance system and self-parking.

Cons of Buying a Car

Insurance

All dealership and finance institutions will require you to carry full coverage on your vehicle until it is paid in full. Insurance premiums are based on several factors, including the age of the car. The newer the vehicle, the higher the premium will be whether full coverage or liability.

Higher Expenses

Buying a new car include high expenses. So the buyer with a low budget can’t afford it, and it will become very difficult for him to buy a car.

Conclusion

If you always like to drive the latest models and don’t have the credit or money to buy a new car leasing can be a smart option.

If you plan to keep your car for the long term, modify it or drive a lot of miles, it makes more sense to buy.

Amit Kumar

FreeEducator.com blog is managed by Amit Kumar. He and his team come from the Oxford, Stanford and Harvard. At FreeEducator, we strive to create the best admission platform so that international students can go to the best universities - regardless of financial circumstances. By applying with us, international students get unlimited support and unbiased advice to secure the best college offers overseas.