Should you buy or lease a new car? The advantages and disadvantages
You’ve done your research and the test drive, and you’re ready to take the plunge on a new car. Now the sales rep asks you the big question: Do you want to buy or lease the car?
Both choices have their pros and cons. It’s your decision, of course, but you should take the time to weigh the options.
Purchasing a car is an investment. It’ll set you back, but there are advantages to buying.
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1. The car belongs to you: After a set period, the car is yours. You can then resell or keep it without having to make monthly payments. Better still, if you keep the car for a few more years, you’ll probably save enough money to make a decent down payment on your next car!
2. No mileage limit: You drive a lot and enjoy Sunday outings with the family. If you own the car, you don’t have to worry about how much mileage you’re putting on the car.
3. Lower interest rates: Most manufacturers offer more attractive rates when you’re buying than leasing. Take the time to compare them.
1. Higher payments: In general, monthly payments on a purchase are higher than those on a lease. It’s a major consideration if you’re on a tight monthly budget.
2. The warranty will expire: You hope to save money by keeping your car for a few more years, but you could end up paying for repairs that are no longer covered by the warranty.
3. It’s more trouble to upgrade: When the time comes for a newer model, you’ll have to trade in or sell the car if you own it. Kijiji’s used car sales guide will help, but you’ll still have to do some work.
Leasing a car is a long-term contract that also has advantages and disadvantages.
1. Lower monthly payments: Manufacturers often make tempting installment offers that can add wiggle room to your monthly budget.
2. You can upgrade more easily: Do you have a 36-month lease? At the end of your contract, all you have to do is return the car to the dealer and start the process to lease a new one. Simple!
3. Worry-free driving: Your vehicle is always under warranty, which can be a weight off your shoulders!
1. Higher total cost: You pay interest on the total value of the vehicle, and you’ll have to pay a residual amount at the end of the contract if you want to keep the car. Once the calculations are done, you’ll see that a lease can cost more than a purchase.
2. Be careful about its condition: A car with too much wear and tear will be expensive to return because you’ll have to pay for the damage.
3. Limited mileage: You’ve signed a contract limiting the distance you can cover. If you go over, you’ll have to pay an extra mileage fee that can be substantial.
So, lease or buy? Your dealer knows the various options well and can take you through them. All that’s left is to make the choice that’s right for you.