Is It Better to Lease or Finance a Car?
Posted on December 8, 2017
It isn’t easy to know the best way to own a car. Unless you work in the car biz, you’ve got to rely on the professionals to help you make the best decisions. What you do know is that there are two ways to own a car for yourself, and that’s to lease or finance a car. Often, you can picture yourself going either way, but how do you know which one is better for you?
Should You Lease or Finance?
The decision to lease or finance truly comes down to you. It depends on several questions, the answers to which will help you find the right path for you.
How Much Do You Drive?
A lease might be right for you if you drive less than 10,000 to 15,000 miles per year. Above that, you’ll be paying a penalty for every mile you go over. At the end of your lease, it can add up to thousands of dollars, and you’re probably not prepared for that situation.
When you purchase a car through financing, the number of miles you drive doesn’t really matter. It’s yours – you can do with it as you like, and you don’t need to limit how many miles you accumulate.
How Well Do You Treat Your Cars?
When your lease term has matured, you give the car back. If you keep your car in pristine condition, there’s no concern about leasing. But if you’re hard on your cars, that can rack up serious penalties.
You’ll be charged for excessive damage and wear and tear on your leased car, and it’s not cheap. That includes accidental damage too. Unless you look after your car really well, you might want to lean toward financing instead.
Can You Afford a New Car?
The advertised prices of new cars might seem reasonable, but you need to consider extras. There are taxes, licensing, and registration costs, and that can make a new car unattainable.
Leasing is offered almost exclusively on new cars. If you need lower payments and more flexible terms, financing a used car is probably in your interest.
Do You Prefer Equity in Your Vehicle?
The great thing about a lease is that you can give it back, no strings attached, when the lease matures. Unfortunately, you’re then starting from scratch all over.
Financing a car is different. As you make your payments, eventually you owe less than what your car is worth. It’s known as equity. If you ever need or want to sell your car, it has value more than your loan. You can use that for whatever you like, including a down payment on another car.
In the United States, nearly seven out of ten vehicle purchases are through financing. For most people, it’s the better option when choosing between lease or finance. In Kansas City, competitive financing for pre-owned vehicles is found at your premier used car dealer, CarUp KC. See us when you need your next car. We’d be happy to help you get into a car you love to drive.
