It’s easy to get sticker shock when shopping for a new car or truck, as they’ve gotten REALLY expensive in recent years. To combat this, lenders have started offering longer duration loans to keep people’s monthly payments down, with some as long as 84-months!
Do you really want to be stuck paying off your car for 7 years? Unless you plan on owning this car for the rest of your life and driving it into the ground, the answer is probably “No”.
So what’s the alternative if you absolutely must get a new car? Leasing.
Now I know what you’re thinking. “I don’t want to have a never-ending car payment..” Sure, that’s one way to look at it, but here’s another way to look at it. With leasing, you’re basically getting into a new vehicle every 2-3 years, you can afford to drive a nicer (higher-priced) car than you might otherwise be able to afford, and the car will be covered under warranty should anything go wrong. And at the end, you just drop off the car at the dealer.
Leasing often gets a bad rep, but depending on your situation, it might just be the best option for you. If you’re someone who drives less than 15,000 miles a year, typically holds onto a car for 3 years or less, wants the latest and greatest in technology, and doesn’t want to deal with the hassle of selling or trading in your old car, leasing makes total sense.
On the flip side, when you’re leasing a car, you’ve got some limitations that you have to keep in mind. Mileage is perhaps the most important. Most lease contracts allow for between 12K-15K miles per year. Go over that, and you will have to pay an excess mileage penalty, which could range from $0.10-$0.50 for every additional mile. As one of my friends learned the hard way, that can get real expensive in a hurry.
In addition, you need to bring back the car in “as it left the showroom” condition, minus usual wear and tear. So if you’re someone that plans on heavily modifying their vehicle (body kit, lowering springs, upgraded turbo, etc), you’re better off buying the car outright.
So there you have it. In the end, the buying vs leasing debate really comes down to your wants and needs. If you like getting into a new car every few years, wants a lower monthly payment, and don’t mind the mileage restrictions, leasing is a great option. But if you are someone who would much rather own a car outright, without any restrictions on what they can and can’t do, then buying is probably a better fit for you.
Either way, make sure that you do your proper due diligence before signing on the dotted line, as accepting the wrong deal can end up costing you big time. Click here for more information about your various contract hire and leasing options.