Lease or Buy a Car
Lease or Buy a Car? The most practical advice on whether to lease or buy, and why a car lease is usually a bad idea.
Should I Lease or Buy a Car?
Lease or buy car? That is the first decision you have to make when getting a car.
A car lease may seem attractive initially, as you get to drive the car you want even though you may not have the money to afford it outright. However, from a financial point of view, a car lease is almost never a good idea.
Lease vs Buying a Car
A car lease entitles you to only use the car for a few years; when the lease period expires, you have to return it or purchase it at an inflated predetermined price. Thus, while the monthly fee may be low, leasing companies would usually set a high predetermined price – when the lease expires, this forces you to lease yet another car instead of purchasing the car outright.
To Lease or Buy
Furthermore, you will get into more trouble if you can no longer afford your lease payments. Though you can give the car back to the leasing company, you still owe the company the remaining balance on the lease. You then have two options, neither of which are attractive: sell it for as much as possible and pay the remaining amount to the lease company, or find someone to assume the lease obligations.
If you choose the latter, be aware that the lease is still tied to your name; you will still be responsible for the lease payments if the person who assumes them fails to pay. The former will also be difficult, as the value you owe on the car is usually significantly more than the car’s current market value; you will still have to make up for the difference. With a car lease, the deal is usually made such that you owe more than the car’s current market value.
Buy the car
A much better idea would be to buy the car. This way, even if you have to make monthly payments to the bank, you can still sell the car at competitive market rates if the need arises at any time.
Buy used cars
Getting used cars is also an excellent idea. New cars decline significantly in value once you purchase them; there are many excellent bargains to be found for cars just one to two years old. They look almost brand new but cost much less. And unlike in a car lease, you get to own the car.
Are trade-ins a good idea? Unfortunately, you will almost certainly get less for trading in a car than for selling it yourself. Selling your car on your own is not too troublesome, given that there are so many avenues available if you are willing to put in a few hours: classified ads, Ebay, online postings – the list goes on.
Is it Better to Lease or Buy a Car
Lease or buy car? In almost all cases, it is better to buy a car.