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Should you buy or lease?

Should you buy or lease your new car?

When it comes to car buying you want to work with people you can trust. One of the most difficult parts of the car buying process is choosing whether to buy or lease your new vehicle. Today we will be talking about the pros and cons of each option so you can make an informed decision when it’s time to buy. Choosing whether to lease or buy ultimately comes down to your individual needs and preferred lifestyle. Leasing a car gives you the ability to drive a brand new car, with the newest safety engineering, technology and comfort features, every two to three years. Buying seems to be the more popular option for families for a reason, once the payments are over, usually within five years or 60 months, you own a car. Buying a car may not give you the same status on the road as someone with new wheels every few years but your payments eventually end, a cycle that continues as long as you lease. This constant payment cycle is why over time a lease will cost more than buying. The car experts over at Edmund’s did a study on the associated cost when buying a car versus two lease contracts over a six-year period. The website looked at an average midsized car that sells for $25,929, including drive-off fees of $1,154. Leasing this car for three years resulted in monthly payments of $294, significantly less expensive in the beginning than buying the car. The second three-year lease agreement, with an updated model of the same car, would require similar monthly payments of about $294. The average down payment with a five-year loan is about $4,000, with a 1.64 percent interest rate and $400 monthly payments. The total out of pocket expense after the six years is $23,476 for leasing and $28,104 for buying. At first glance, leasing costs $4,628 less than buying, however, the car buyer now owns that car. At the end of the six years, the leaser has the opportunity to begin another lease, whereas the buyer now keeps a car with an expected value around $10,000. Assuming this vehicle is regularly maintained and kept in decent working order, the car can last for years, without costing too much more, barring any major accidents or maintenance issues. Should the buyer then choose to sell their car, the original out of pocket costs change from $28,104 to $18,104. Looking at the longer scheme, buying costs about $5,400 less than leasing. However, these calculations don’t take into account the repair and maintenance costs associated with owning an aging car. Leasers have to worry about wear and tear on their cars as well but with so many options for monthly maintenance, a careful driver will be protected for as little as $15 a month. Furthermore, the factory warranty covers most repairs over a three-year lease.  Any serious accidents are covered by the leasing company’s GAP insurance at no cost to the leaser. That accident is simply recorded on the car’s Carfax report and no further damage is done to your wallet. Car owners do not have the same luxury. Leasers often pay higher insurance premiums, which offer greater coverage as well. On the opposite end, car owners will have to cover any accident costs on their own and the resulting increased premiums. All cars suffer from depreciation, but leasers don’t have to worry about trade-in or sale value, unlike buyers. Another benefit of leasing is the opportunity to purchase the car at the end of the leasing period at a preset price that reflects the car’s current market value. Before the start of your lease, the finance company will set the purchase price for the car, protecting you from unexpected price changes. It is important to remember the mileage limit set by the leasing company which can be anywhere from 12,000 to 20,000 miles a year. For some buyers this is a reasonable limit, for others, it will be a costly fee at the lease termination, about 15 cents per excess mile. All of these fees can be avoided by utilizing a TriState Auto Champs Customer Advocate to negotiate your early lease termination. For long-distance drivers, buying is the way to go. Aside from unlimited mileage, buying gives you the freedom to modify your car as you wish with the added flexibility of selling the car whenever and to whomever you want. If the car you bought is well maintained it can last for an indeterminate amount of time. This is especially attractive to parents who may want to pass on cars to their children. In the end, whether you buy or lease, you shouldn’t go into the negotiations alone. Let the professionals at TriState Auto Champs take care of the heavy lifting and drive off in a car you love. Reach out today to find out the best option to get you in a new car.