Wednesday, May 3rd, 2023
Finding a new or used car that meets your criteria is a challenging endeavor in today’s market. If you need a new car right now, what’s your best choice? Let’s take a deeper look at buying versus leasing a car to help you determine which option makes the most sense for you.
In every market, there are some drivers who are better suited toward owning a car and others who benefit more from leasing. The following are the top four important factors we suggest for you to consider when making this decision.
If you like to swap in your cars for a newer model every few years, a lease may be a better fit for your lifestyle. On the flip side, if you tend to hold onto your cars for many years, consider buying a car instead.
Leases require full insurance coverage, which can be pricey. When you own your vehicle, though, the amount of insurance coverage beyond what is required by law is your decision.
If you like having full protection that includes GAP insurance (GAP Insurance pays the difference between what you owe on a car and its true value if it’s totaled in an accident or stolen), then a lease may be a better choice for you. If you tend to purchase just minimum coverage, you may be better off purchasing your vehicle.
If you usually put more than 10,000 miles on your car each year (the standard milage amount allowed by most leasing companies before charging extra), you may be better off buying a car. Keep in mind, though, that you’ll still need to pay for those miles in depreciation costs of the car.
When you lease a car, most maintenance costs are on the leasing company. You’ll need to pay for anything related to wear and tear of the vehicle, but most other repairs will be covered. You’ll also have the option to pay extra for tire protection, and dent and scratch insurance.
When you own your car, you’ll be footing the bill for all these costs, plus any maintenance needs. To minimize these costs, don’t finalize a car purchase without first ensuring it’s in good working order. You can do this by using its VIN (vehicle identification number) to look up its car history and by having it professionally inspected by a mechanic.
While individual circumstances vary, in general, you can expect the cost of purchasing and leasing a vehicle to break even at the three-year mark. While a lease may offer you cheaper monthly payments, you’ll likely earn back two-thirds of the price you paid on a car if you sell it after three years.
If you’re choosing between buying or leasing a car, be sure to weigh all variables carefully before making your decision.
When you’re ready to make your decision, a great option to consider is applying for an auto loan face-to-face with AGCU’s video banking service.
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