Are you planning to purchase a new vehicle this year? Whether your car is a lemon and about to bite the dust, or you are just in the market for an upgrade, the decision to buy or lease a car can be a tough one. There are many things to consider when making a purchasing decision including how your decision will affect your car insurance.
So, if you are in the market for a new car, how should you determine if you should buy or lease? Before getting into anything, this is a decision that will be dependent on many different variables that are unique to your situation. For example, if you have to drive a long way for work, or are constantly on the road, going to meetings, leasing a car is not for you, due to the mileage constraints. Buying and leasing both have viable advantages over the other. What is important is to weigh the advantages and disadvantages according to your specific situation.
Below, we compare advantages and disadvantages of buying vs. leasing:
Short Term Cost: In the short term, leasing a car is less money up front and per month than buying a car.
Long Term Cost: If you plan on driving your car for a long time, buying a car will end up costing you less in the long run. If you decide to lease vehicles, you will always have a monthly payment, which is not the case for buying a car.
Maintenance: Maintenance on a leased car will typically be less expensive than buying a car, as it always falls under the vehicle’s factory warranty.
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Mileage: Driving a lot of miles can be hard on your vehicle and can break your lease contract. Therefore, if you drive a lot, it is recommended to buy a vehicle. Typically, a lease will have a 9,000-15,000 mile restriction, and you pay a fee for every mile you go over. If you drive a lot, this fee could become quite costly.
Time and Commitment: If you decide to buy your car, you can keep it for as long as you like, or sell it whenever you want. If you have a lease, it can be hard to get out of your lease contract, so you might find yourself stuck. Once your lease is up (usually a 24-39 month period), you can upgrade the make and model of your car by starting a new lease.
There are many online tools and quizzes that you can take to help you determine which option is best for your scenario. Here is a quiz from CNN Money to help you make a decision.
Also, whether you are buying or leasing a vehicle, make sure you know how much you car insurance rates will be. Car insurance will vary based on many factors about yourself and your vehicle.