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
- 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.
- You will not have to sell or trade the vehicle. The vehicle dealership will take care of all the details for you.
- Generally, the payments are lower when you lease a vehicle compared to financing a vehicle via a loan.
- 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
- 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.
- The annual mileage you can drive is fixed by the terms of the lease with financial penalties if you exceed the set mileage.
- The vehicle will never belong to you.
- To achieve the full benefits of leasing a vehicle you will need to drive it a lot.
Advantages of Buying a Vehicle
- You will own the vehicle outright and can do whatever you want to do with it.
- You can make whatever changes you want to, to the vehicle; the only limit is your imagination.
Disadvantages of Buying a Vehicle
- If you use finance to buy a vehicle you could potentially pay higher monthly payments.
- You will need to cover the expense of vehicle repair costs.
- You will be responsible for the resale or trade of the vehicle.
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