New Car Price Quotes - Tip #3

Posted on February 1, 2005 at 1:44 pm by Jeff

Should I Lease or Buy?

Today I will look the concept of leasing vs. buying when it comes time to replace your current vehicle. Leasing as a way to acquire a new vehicle is actually a relatively new concept. It is continuing to grow in popularity and is still a very good option for many consumers.

Leasing is a very good option if you:

• Want a vehicle that is always under warranty
• Want a lower monthly payment
• Don’t want to deal with a trade-in
• Like to drive a new vehicle every 2-4 years

Let’s take a look at each of these points in a little more detail. A typical lease is based on a specific timeframe (3 years) and has a mileage allowance (36,000 miles). You can negotiate a longer or shorter term, and you can purchase additional miles if you think you will need them. Most lease terms also coincide with the manufacturer’s warranty on the vehicle. As long as you don’t go over your miles, your vehicle should be under warranty for the entire lease term. This is great for consumers who want to avoid costly out of pocket expenses for repairs.

Leasing can also result in a lower monthly payment. With leasing you are financing the difference between the purchase price of the vehicle and the estimated residual value at the end of the lease. This difference is spread over the lease resulting in a much lower monthly payment than if you finance the same vehicle over five or six years.

One nice benefit to leasing is that you don’t need to deal with a trade-in. When your lease is up you simply return your vehicle to the dealership. You don’t need to deal with a trade and won’t incur additional debt by trading in a car which is worth less than you currently owe (this is called negative equity).

Leasing is also an ideal option if you like to drive a new vehicle every couple years. You might have kids that are getting older and have different needs, or you might be making more money or have a more prestigious job and need something a little more luxurious. Leasing provides you the flexibility to turn over a vehicle in a much shorter period of time while saving you some money in the process.