Car Buying Vs Car Leasing
Millions of people lease or buy their cars every year and go through the decision process of whether they should lease or purchase their new cars or even whether they should lease used cars in some cases if they are not older than one or two years. Many buyers have firm ideas about whether to lease or purchase a new vehicle and there is no new information that will push them into one camp or another. They either only lease or they only buy a car and that is just the way it is.
There is a large group in the middle who are willing to consider buying or leasing and it really depends on their likes and dislikes, as well as their personal situation. We will cover some of the factors that consumers may want to consider when they are making their decision to buy or to lease.
There are many web sites that will provide a variety of tools to assist you in analysing your decision from an economic perspective. This is a good start and a must do for every person intending to acquire a new car. The variables that will be usually considered when you use these tools are: purchase price of the new car, interest rate on the loan, miles or kilometres driven each year, length of the analysis period which is usually the lease period being considered, the resale value if you sell the car at the end of the study, the residual value of the car when you return the car, the interest rate of the leasing loan and the amount of money you will put down on the lease or the purchase of the car.
Once you enter all of this information and click calculate, these tools will tell you if you are better off leasing or buying based on the economic assessment of these variables. Consumers can and should do some sensitivity analysis as well to see if the recommendation would change. One factor to test is the number of miles you will drive every year. This is always a big concern for drivers, especially those that lease cars. Usually there is an allowance and anything over that is charged at so much per mile. If you think there is a chance you might go over your limit, complete a sensitivity analysis on this variable and increase the mileage to whatever you think you might actually drive in a given year over the limit.
The program will quickly tell you the impact and also if the recommendation will change or not regarding whether you should lease or purchase your car.
There are other variables that should be considered when leasing or purchasing a car. You will be responsible for any repairs that may be required to the car when you return it after the end of the lease. Some companies require you to tell them if you plan to take the car out of state or out of country for any extended length of time. They also will stipulate the amount of insurance you must have on the car if you lease it. If you purchase a car there is that feeling of ownership and you can sell it whenever you are so inclined were as if you are leasing, you generally must keep the car for the balance of the lease.
Hopefully we have helped you with your decision to lease or purchase your car.