Buying a Car vs. Vehicle Leasing

Posted by Tarun Aarya on December 11th, 2017

The most apparent difference is that with a lease policy, you get a new car after few years and won’t have to deal with the annoyance of selling the car in future. You just have to hand over the keys to the seller and get a new lease. On the other hand, when you purchase a car of your own, all the monthly payments you make on a financed vehicle form equity and as soon as you pay off the loan amount, it’s completely yours, and you can sell it off (or donate it) for something later and if you are purchasing a car without taking a loan, you save a lot more money.

Things to Consider At the Time Buying or To Lease a Car

Monthly Cash Flow

Leasing a car usually has a lower monthly payment when compared to financing a vehicle with the similar loan terms, meanwhile, with a lease, you are paying for the depreciation of the automobile during those years rather than the complete vehicle cost. If you necessitate access to more cash each month, leasing can turn out to be more promising.

Available Savings for a First Installment and Down Payment

Most of the lease agreements have low down payments, or you can get the showroom dealer to waive the down payment. Moreover, you will pay less for the sales tax on a lease too (the tax is considered in most of the states only on monthly payments, not the entire cost of the car). With lesser down payment, leasing has a trivial impact on your financial plan and cash balance.

Average Driving

If you drive a lot, then chances are on the higher side that you would have to pay extra depending on the signed lease agreement. Nonetheless, if you purchase the additional kilometers upfront, you can certainly get a much better deal.

Using the Car, the Right Way

If you are prone to getting scratches on your vehicle or have a high risk of dents to it from kids or other threats, a lease might not be for you, because of the wear-and-tear charges. Wear and tear fees differ and would depend on your contract.

Purpose

When you lease, a part of the car’s depreciation and funding costs can be subtracted from your taxes. Interest on loans to buy a car, on the other hand, isn’t deductible. The IRS has a guide for how to analyze the tax deduction for a leased vehicle through a vehicle leasing service provider (there are loads of calculations depending on your business percent usage of the car, how much the car prices, and additional expenditures associated with the vehicle, such as fuel and maintenance).

Duration and Flexibility

This is a huge consideration, of course, because if you actually keep the car for a short span of time, leasing is the most suitable option. On the other hand, you will have to pay a lot if you wish to get out of the lease prior to the conclusion of the period, as much as six extra months of payments then you do make sure you stick to the terms of your contract.

On the whole, buying a car always appears to be the best choice in the more extended run, but leasing has its very own benefits that cannot be denied.