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Leasing Vs Buying
When you finally decide on a new car you have two options: buy it or lease it. Unless you buy the car straight up with cash you are going to be paying some kind of monthly rate on your auto loan. When you lease a car you also pay a monthly rate on it, but instead of owning you are basically renting the car. Think of the difference between the two as the difference between buying a house or renting a house/apartment. So what exactly is the better option? It depends on what works best for you, however it would be nice to know the differences between the two.
When you lease a vehicle you are renting it. You do not own the vehicle and when the lease is up you will have to give it back. When you buy a vehicle and your auto loan is up you get to keep it. Auto loan payments tend to be more per month then a lease payment. When you are leasing, however, you have to have the car in a certain condition when you return it. There will most likely be a cap on the miles you are allowed to drive and if you go over you will have to pay a fine. When you lease you will essentially be paying for the most expensive years of the car's life.
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The Answer Is Auto Loans
For example if you are buying a 2008 Ford Escape Hybrid Sport Utility its average price is about $27,780. We are assuming there is no down payment made, which is rare. We are also taking the average sales tax rate, residual value rate and interest rate seen today. Using these averages combined with a five year length for auto loans and a three year length of a lease (these are the most common terms) it would cost you about $150 less a month to lease the car. However when you lease you are giving up the residual value of the car, in this case the $14,775 the car is worth when you have to turn in your car. There is also the possibility of unforeseen fines that you incur during the course of your lease, such as going over the alloted miles or leaving the car in bad condition. When your auto loan is up the value of the car will be lower because the loan length is longer, however you can trade that in towards a new car or keep driving it. When you have to turn your leased car in, you are pretty much forced to buy a new car or else find another mode of transportation.
If paying lower monthly rates is worth it to you, then maybe leasing is for you. However it is much more convenient to own a car then rent one which is why buying a car is still the most popular choice amongst consumers today. Looking at all the facts it probably make more sense to buy, but always base your decision on what works best for you. |
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Get Your Free Auto Loan Quote Today!
Tired of competing with banks to find a decent auto loan? Well at A1 Auto Club we believe that the customer is top priority. It is time that you sign up today for a auto loan that is just right for you. Through our fast and secure application process you can receive a free quote in a matter of minutes. So it is time to stop searching and to APPLY NOW!!
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Auto Loan Fact #20:
Avoid high interest rates when financing to save money.
Auto Loan Fact #64:
A1 Auto Club provides loans for all types of vehicles, new as well as used.
Auto Loan Fact #9:
When signing for a loan you may sign on with another person. This person is considered a cosigner and does take on the same responsibility as the original signer for the congruent loan. |
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