Education, Living, Tips & Techniques

Do you know the benefits of Leasing a Car?

To lease or not to lease.

words by: Natasha Marsh
Jul 20, 2022

I am at a point in my life where buying a car seems more realistic than saving up for a house. And because I have expensive taste on a somewhat-beer budget, I have been looking into my options and assessing my situation, deciding if I should lease or purchase a car. In my research, it is clear that both come with their own pros and cons. Let’s break it down, shall we?

 

Buying a car

Buying a car mostly requires getting a car loan. You can borrow from a credit union, bank, or other institute, and make payments every month for a duration of years. A large payment goes to the loan, while the rest is used as the down payment. Typically, buying yields higher monthly costs, but in the end, your car and equity will have been earned as you pay the loan off. Unlike leasing, you can keep the car for as long you’d like.

 

Pros of leasing a car

Likewise, leases have lower monthly payments, but require a really good credit for the best deals. The monthly payment is usually lower because you aren’t paying a principal, you are just borrowing and repaying the difference between the car’s value and residual cost.

 

The biggest perk about leasing a car is that it’s brand new — allowing you to drive it during the most trouble-free years — without tons of servicing to pay for. Oftentimes, the lease will include free services like oil changes and other routine maintenance checks.

 

Another bonus to leasing a car is it allows you to live a life you might not have been able to afford, giving you an alternative to renting cars that are more outside of your means.

 

You also won’t have to worry about inflation because you won’t have the stress of selling it when it’s time to move on. You simply just drop the car off at the dealers.

 

If you do end up leasing a car, remember to negotiate. Sadly, monthly payments can increase based on the manufactures retail price so don’t forget to negotiate. A way to get around this is to opt for longer leases, like 6-8 years, to lower your monthly payment.

 

Cons of leasing a car

There are, of course, some cons. Leasing a car ends up being the same amount of a loan because you’re paying for the car at its most rapid depreciation. And it becomes even harder if you get into a cycle of leasing cars. You will be in a long ongoing circle of monthly payments.

 

Lease contracts also entitle you to a specific number of miles, and if you go over that mileage, you will accrue a penalty. And sadly you don’t get credit or money back for unused miles. Which is why, if you plan to lease during the pandemic, you might want to rethink it if you plan to be inside all day.

 

Lastly, if you don’t keep the vehicle in good condition, as per your contract, you will be forced to pay wear-and-tear charges. So make sure all pets and children or guests understand that each time they enter the car. Basically, if your goal is to drive a new car every couple years, then leasing is definitely the way to go.

 

If you want to compare this with buying a car, read this.