Is it better to lease or buy a car | Iceautogroup
When you are searching for the most cost-effective alternative in the long term, sometimes the safest choice is to purchase a used car and keep it for a couple of years after you paid it off. But what if you like the most up-to-date safety features or the newest technology? Leasing could give you the freedom to make the upgrades you 're looking for periodically without breaking the bank.
The reality is that when it comes to the age-old issue of Is it better to lease or buy a car there's no one-size-fits-all solution. Nonetheless, knowing some of the primary cost factors and your personal preferences will help you determine what's right for you.
Let’s look at some of the important factors you should consider before talking to a dealer.
Things to Consider Before Buying a car
Buying is not always ideal, and buying cash (i.e., the full purchase price upfront) is not always better than having a loan over time and paying.
You could walk into the dealer, drop some stacks, pick up the keys, and cruise if you had the cash at hand. But remember the concepts from above: although you'll pay $0 in interest, you'll be without $37,000 to invest instantly (time value of money) and not earn that juicy 62 percent return (opportunity cost) over the last 60 months I mentioned above.
Even if the opportunity costs are set aside, buying a car is almost always more costly in the near term.
Some pros of buying: owner rather than renter, cheaper over the long term, and no restrictions on use or customization.
Some cons of buying: you’ll be responsible for post-warranty maintenance and repairs, you need higher credit to take out a loan, you pay full sales tax, and it’s more expensive in the near term.
Things to Consider Before Leasing a car
If your main goal is to get the lowest monthly payments, your best option might be to lease. Monthly lease payments are usually lower than auto loan fees because they are based on the depreciation of a vehicle over the time you 're driving it, rather than its purchase price.
Lower monthly payments might help balance your budget, but keep in mind that your monthly payments won't end in ownership when you're leasing. Which makes it inevitable that you will lease again, meaning more monthly lease payments. On the other hand, buying means knowing that your monthly payments will eventually stop when you pay off your car loan
Most lease agreements have low down payments or you can get the dealer to waive the downpayment, and you’ll pay less for the sales tax on a lease as well (the tax is calculated in most states only on the monthly payments, not the total cost of the car). As with the lower downpayment, leasing has a smaller impact on your budget and cash balance.
Whether it’s better to lease or buy is affected by what meets your needs now and over the coming years, so think about how long you want to keep the car. Whatever you decide, look for the best deal on your financing to optimize your choice. And if you decide to lease a car, iceautogroup has the best deals available for you.