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Home / Finance / The Advantages and Disadvantages of Leasing Versus Buying a Vehicle

The Advantages and Disadvantages of Leasing Versus Buying a Vehicle

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Everyone has a different opinion when it comes to buying versus leasing a vehicle. Some believe it is more advantageous to lease and others believe it is more advantageous to purchase a vehicle outright.

Every situation has its advantages and disadvantages. The following is a list of the advantages and disadvantages of leasing versus buying a vehicle:

Advantages of Leasing a Vehicle

  1. Every few years you get the opportunity to drive a brand new vehicle. Many people find it very advantageous not being tied to one vehicle for a long period. Purchasing or financing can trap you in a longer term relationship with the vehicle.
  2. You will not have to sell or trade the vehicle. The vehicle dealership will take care of all the details for you.
  3. Generally, the payments are lower when you lease a vehicle compared to financing a vehicle via a loan.
  4. Your vehicle will always be covered by a warranty. Every time you take delivery of a new leased vehicle, it is covered by a warranty, unlike when you purchase a vehicle.

Disadvantages of Leasing a Vehicle

  1. The vehicle must be maintained in an excellent condition and you will need to have gap insurance. Potentially there can be financial penalties for not taking care of the vehicle.
  2. The annual mileage you can drive is fixed by the terms of the lease with financial penalties if you exceed the set mileage.
  3. The vehicle will never belong to you.
  4. To achieve the full benefits of leasing a vehicle you will need to drive it a lot.

Advantages of Buying a Vehicle

  1. You will own the vehicle outright and can do whatever you want to do with it.
  2. You can make whatever changes you want to, to the vehicle; the only limit is your imagination.

Disadvantages of Buying a Vehicle

  1. If you use finance to buy a vehicle you could potentially pay higher monthly payments.
  2. You will need to cover the expense of vehicle repair costs.
  3. You will be responsible for the resale or trade of the vehicle.
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