A commercial for a sleek new car catches Diana's eye – with only $1,000 down and $169 per month, the car could be hers! But then she realizes the low payment advertised is for leasing the car, not owning it. Now she wonders, should I lease or buy?
The decision on whether to buy or lease a car can be difficult. Most of the time, experts advise buying instead of leasing. But there are some circumstances that make leasing attractive. Here are some things to consider while deciding.
Leasing – the Pros and Cons
Leases typically don't require a large down payment, and the monthly payments are often lower than buying. That's because you are only paying off the expected difference between the value of the car brand new and its value when you return it at the end of the lease, not its full value. Leasing may also allow you to drive a newer car than you would be able to afford if you bought. Sounds great, right? But not so fast. There are some pretty big disadvantages too.
If you lease instead of buy, you won't own the car, and after the lease is up, you won't have anything to show for it.
Plus, there can be big fees involved if you aren't careful. Most leases charge you extra for every mile you drive over a certain limit (typically 12,000-15,000 miles per year). There can also be penalties for damage beyond simple wear and tear, and your insurance costs may be higher if you're required to purchase GAP insurance in addition to comprehensive and collision insurance.
What to Do?
A low-interest rate auto loan from SCCU can help you afford to buy a car instead of lease. We can help you run the numbers and decide how to finance the car of your dreams.