Should you Lease or Buy?

Today leasing is becoming a more and more popular consideration among automotive consumers and with very good reason. One of the biggest advantages of a lease is that it allows you to drive a brand new vehicle for less money than you would normally be able to afford. If you have your eye on a premium luxury vehicle, a lease offer can make a lot of financial sense and get you into the vehicle for far cheaper than you might expect. Still, before you sign on the dotted line, it’s a good idea to make sure you understand all of the advantages and disadvantages of leasing vs. buying.

First, it’s always a good idea to make sure you completely understand which model is being represented in the lease offer. Just because the offer says it’s for a Hyundai Santa Fe doesn’t mean that you can get a fully loaded Santa Fe for the same price as the lease offer. Most commonly, the lease offer will be for a base model with a manual transmission. If you desire an automatic transmission or have your heart set on certain options, be prepared to shell out more cash than is advertised in the lease offer.

Also, know that you will probably need to make a down payment and that down payment may be sizeable. It’s not uncommon at all for a lease offer to require at least a $4,000 down payment. That’s fine if you have the extra cash lying around or you have a trade-in but be aware of what you are doing if you trade-in a vehicle you own free and clear to lease a vehicle. Basically, you are exchanging something you own for something to rent.

Keep in mind as well how many miles per year you tend to drive. If you commute a distance to work the lease option may not be the best idea for you. This is because most lease terms come with a maximum mileage cap per year somewhere around 10,000 miles. Most people; however, drive at least 15,000 miles per year or more. So, what happens if you go over that amount? At the end of the lease term you will face a penalty and be required to cough up some extra cash. On the other hand if you only putter a few miles back and forth every day and do not plan any long trips on an annual basis, a lease agreement may be just right for you.

Consider how long you like to keep a car as well. If you prefer to keep a car for a few years, longer than three or four, leasing a car may not be the best option financially for you over the long term. At the end of the lease you will need to either turn the car back in and be left with nothing or replace it by buying or leasing another car. Of course, you would also have the option of buying the existing car but once again you will be facing a heavy cost outlay.

On the other hand if you are the type of person who likes to drive a new car every couple of years in the long run leasing can make a lot of good financial sense. Regardless, it’s a good idea to think ahead before you sign on the dotted line agreeing to a lease offer.

By taking these guidelines in mind before you make a decision you can be sure that when you do it is the best one for you and your situation.