Pros and Cons of Leasing vs. Buying on Credit

 

If you've been drooling for a new car, you've got a lot of things to think about it. You need to consider the type or model, color, and the options that you want in a car. Another thing you have to ponder upon is whether you should go for a lease or buy it instead.

 

To help you on deciding which is better, here are some of the pros and cons of leasing vs. buying:

 

PROS OF LEASING:

 

1. Affordability.

 

Monthly lease payments are usually lower than buying cars on credit. In leasing, you only pay for the car's wear and tear while on the lease term, plus other fees such as interest and taxes (but only on the smaller lease payments rather than on the entire value of the automobile).

 

Buying cars on credit would mean higher monthly payments because you're paying for the entire car. And because it is on credit, additional charges will apply like interest rates, taxes, and other finance charges.

 

2. Better terms.

 

If you're into driving new cars time and again, then leasing is a better option compared to buying a car. Purchasing a car and paying it off through a loan can be very tedious. The moment you're done with it, you're stuck with an old car.  On a lease, you can just turn it in and get another lease on another new car.

 

3. End of the deal is a snap.

 

At the end of a lease, all you have to do is to return the car, pay all of the remaining charges such as for excessive mileage and wear and tear if applicable, and walk away. You may have the option of buying it if you wish, or the company will be the one to sell the car.

 

Whereas, when you buy a car, you still have to find ways to sell or trade it in case you want a new car, otherwise you have to continue to pay insurance and any remaining payments on the old car.  Have you ever tried to sell an old car?  It’s not a pleasant experience.

 

4. Shorter terms.

 

Buying cars outright usually has a longer payment plan because of the much higher value that you're financing. If you're not into long-term commitments, then leasing a car is a healthier choice.

 

5. More savings.