With depreciation hanging like a dark cloud over new car purchases, cost-saving deals provide smart alternatives to eager car buyers.
Car buyers now have the option to either buy a used car or lease any vehicle without having to worry about losing the car's value over the years. Though both alternatives lessen the financial cost, there are big differences that car buyers may consider advantageous or disadvantageous, depending on their situation and needs.
Decide which alternative is best for you. Here's a brief comparison between buying a used car and leasing.
Cost and Ownership. Buying a used car is the cheapest way to own a vehicle since you avoid the depreciation hit. Monthly payments are worth the cost because you are eventually guaranteed vehicle ownership. On the other hand, monthly payments on leasing won't get you equity since you have to return the vehicle by the end of the lease term. If you decide to buy the car at the end of the lease-term, you would have to pay a substantial amount which would cost you more than if you had bought the vehicle initially.
Penalties. You won't have to worry about penalties when buying a used car. Once the vehicle ownership has been transferred to your name, you won't have to answer to anyone as long as you keep your end of the bargain in pay offs. If you drive extensively, you may want to rethink on getting a lease since most leasing companies charge a penalty fine upon exceeding the annual mileage limit--12,000-15,000 miles. Breaking a lease early would also cost you a hefty early termination fee.
Vehicle Condition. An important part of any used car purchase is to make sure that its title is clear by obtaining the complete vehicle history. Checking the vehicle's physical condition is also necessary; otherwise buying a used car could potentially waste your money if you don't do your research. In most countries, it is the leasing company's responsibility to take proper action in order to get redress if you happen to lease a vehicle that turns out to be a lemon.
Warranty and Insurance. A pre-owned vehicle usually has little coverage, limited to only a couple of months. Insurance is cheap for used cars and will depend mostly on the type of coverage suited for you. A good deal for leased cars would include "gap insurance" or waives "gap liability." Through this, you'll be saved from paying the difference between what you owe under the lease and what the dealer can recover on the vehicle if ever it is stolen or totaled.
Maintenance and Repairs. Since used cars have limited warranty, certain maintenance on your purchased vehicle could be more expensive. By thoroughly checking the used cars' history and condition, you could minimize spending unnecessary repair costs. Lease agreements specify who pays for maintenance and repairs during the lease term, but most charge you to fix the excess wear and tear when you return the vehicle at lease-end.
Cheap options could work well if you choose the one which works best according to your needs, wants, and budget. If you want to own a vehicle without having to spend much, then buying a used car is your best option. But if you feel like driving a different car every few years without having to go through the hassle of reselling it, lease a car. Between buying used cars and leasing, it's a matter of weighing the pros and cons.
Car buyers now have the option to either buy a used car or lease any vehicle without having to worry about losing the car's value over the years. Though both alternatives lessen the financial cost, there are big differences that car buyers may consider advantageous or disadvantageous, depending on their situation and needs.
Decide which alternative is best for you. Here's a brief comparison between buying a used car and leasing.
Cost and Ownership. Buying a used car is the cheapest way to own a vehicle since you avoid the depreciation hit. Monthly payments are worth the cost because you are eventually guaranteed vehicle ownership. On the other hand, monthly payments on leasing won't get you equity since you have to return the vehicle by the end of the lease term. If you decide to buy the car at the end of the lease-term, you would have to pay a substantial amount which would cost you more than if you had bought the vehicle initially.
Penalties. You won't have to worry about penalties when buying a used car. Once the vehicle ownership has been transferred to your name, you won't have to answer to anyone as long as you keep your end of the bargain in pay offs. If you drive extensively, you may want to rethink on getting a lease since most leasing companies charge a penalty fine upon exceeding the annual mileage limit--12,000-15,000 miles. Breaking a lease early would also cost you a hefty early termination fee.
Vehicle Condition. An important part of any used car purchase is to make sure that its title is clear by obtaining the complete vehicle history. Checking the vehicle's physical condition is also necessary; otherwise buying a used car could potentially waste your money if you don't do your research. In most countries, it is the leasing company's responsibility to take proper action in order to get redress if you happen to lease a vehicle that turns out to be a lemon.
Warranty and Insurance. A pre-owned vehicle usually has little coverage, limited to only a couple of months. Insurance is cheap for used cars and will depend mostly on the type of coverage suited for you. A good deal for leased cars would include "gap insurance" or waives "gap liability." Through this, you'll be saved from paying the difference between what you owe under the lease and what the dealer can recover on the vehicle if ever it is stolen or totaled.
Maintenance and Repairs. Since used cars have limited warranty, certain maintenance on your purchased vehicle could be more expensive. By thoroughly checking the used cars' history and condition, you could minimize spending unnecessary repair costs. Lease agreements specify who pays for maintenance and repairs during the lease term, but most charge you to fix the excess wear and tear when you return the vehicle at lease-end.
Cheap options could work well if you choose the one which works best according to your needs, wants, and budget. If you want to own a vehicle without having to spend much, then buying a used car is your best option. But if you feel like driving a different car every few years without having to go through the hassle of reselling it, lease a car. Between buying used cars and leasing, it's a matter of weighing the pros and cons.
SHARE
