Buying vs Leasing: Making the Right Choice
Is it better to lease or buy a car? Visitors often ask us this question when they come into our dealership, and we know that the options can be confusing. Both options can be good choices in certain circumstances, so you’ll want to consider every angle. This handy guide should help you decide which option is the right choice for you. Here’s what you should know right off the bat:
- When you buy a car, you’ll be paying for the entire cost of a vehicle. Some people are able to pay upfront, while most will need to begin a payment plan to repay a car loan – but even if you pay in increments, you still pay the full price of the car.
- When you lease a car, it’s yours to use for a set amount of time as you pay a portion of the car’s value each month. That way, you’re only paying for the time you use the car.
So, should you lease or buy a car? Our in-depth look at this important question has all the answers you’ll need.
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Why Should You Buy a Vehicle?
Why Should You Lease a Vehicle?
Advantages of Buying a Car
Owning a car can be a great investment. If you take care of it, you may not need to buy another car for years, or perhaps be able to sell it for a good price when you opt for something new. Because there are no restrictions, you’ll be able to drive as much as you want. And you can customize your car with accessories, add-ons, paint and bumper stickers, or aftermarket performance enhancers. The car is yours to trade in whenever you like, as long as you don’t end up under water on your loan.
Advantages of Leasing a Car
The most significant feature of lease financing is that you’re only paying a percentage of the total price. It’s also worth noting that you’ll only pay taxes on the cost of the lease, rather than the cost of the whole vehicle. Additionally, you won’t have to worry about fetching a good price or finding a buyer for it when you’re done, as the dealership will take it back from you. If you like to have the newest gadgets in your car, leasing may be your best bet, as you can regularly upgrade to drive the latest models. You may also be able to drive a fancier car than you could normally afford.
Buying: Who Owns the Vehicle?
The car is yours and only yours. You might pay for it with cash, or make payments under a financing plan. If you’re financing the car, your lender will require you to meet certain obligations, such as monthly payments or a down payment. Otherwise, your car can be repossessed.
Leasing: Who Owns the Vehicle?
The institution through which you are leasing the car retains ownership. You’re essentially renting the vehicle. Your contract will state you’re using the car for a set amount of time in exchange for a set amount of money.
Up-Front Costs of Buying
Financing a car means the bank or lender will need an initial payment from you, which is usually calculated according to your credit score, among other factors. You may also choose to trade in your old vehicle, the value of which can be put towards your down payment.
Up-Front Costs of Leasing
A lease doesn’t typically require a down payment, but you will have to provide the first month’s payment along with a security deposit, acquisition fee, and any other applicable costs. It’s possible to lower the amount of your monthly payments by increasing your initial fee.
Buying: Future Value & Depreciation
The better your vehicle maintains its value, the better your position as the years go by. While the value of a new car begins to depreciate as soon as you drive it off the lot, you may be able to sell your car or trade it in for a fair price as long as you maintain it properly. It’s important to visit a factory-authorized service facility at regular maintenance intervals for this reason. However, even a car in bad shape may be sold for parts or scrap.
Leasing: Future Value & Depreciation
Because you don’t own the car, you will turn it in to the leasing agency at the end of your lease. However, pay close attention to any mileage restrictions or wear and tear guidelines—excessive use may cost you extra when you return your vehicle. As noted below, leasing costs are partially based on the vehicle’s expected depreciation over the leasing term. This means that choosing a vehicle that won’t depreciate quickly is still a good idea, even if you’re just leasing it.
What Happens at the End of a Financing Agreement?
You’ll have to pay a certain amount as stipulated in your contract, but once you’re done, that’s it. The institution you borrowed from will send you a Lien Release, which is proof that the vehicle belongs entirely to you and may not be repossessed for nonpayment. The vehicle is now yours. It’s also worth noting that many Warwick and Cranston drivers may decide to resell their vehicle before they make their final payment. In this event, you’ll need to use the funds you receive to pay off the remainder of the loan.
What Happens at the End of a Car Lease?
You usually just return the vehicle when your lease ends and choose a new vehicle for your next lease. This flexibility—which can keep you in the latest vehicles year after year—is one of the most important benefits of leasing. However, what happens at the end of a car lease depends on how you’d like to proceed. You may be able to purchase it during or after the term of your lease, or trade it in before the term of your lease is over. If you think you might want to employ any of these options, speak to a representative at our Warwick lease return center today. Don’t forget: it’s always best to prepare for your lease return well in advance of the end of your contract. This makes it much easier to avoid lease-end charges and walk away with a clean slate.
What Are the Best Cars to Finance?
The best cars to finance are those that have a long expected lifespan. After all, any future plans to resell the vehicle will depend on how well it’s expected to hold up down the line. Durability, after all, has a significant impact on depreciation. Of course, you should also prioritize dependability if you’re choosing a vehicle that you intend to keep for years to come.
What Are the Best Cars to Lease?
The amount you’ll pay for a lease is based on the amount of time you’ll have the car and the amount it will depreciate once you’ve driven it, so the cheapest leases are those for cars that will retain their value after the term of the lease is up. You can review lease ratings to see which cars will depreciate quickly and which cars will stay valuable.
Buying or Leasing, You’re In Good Hands at Mercedes-Benz of Warwick
Is it better to When is the best time to lease a car? If you’re located anywhere near Providence or East Greenwich, start exploring our new vehicle specials and find out if that day just might be today! We’re always updating our special offers in order to connect local buyers and lessees to the prices that meet their needs, and we’d love to see you behind the wheel.