A great deal of thought goes into getting a car. While some might rely on a vehicle’s dashing good looks or staggering amounts of horsepower to justify its purchase, there are the select few who look at the acquisition of a vehicle under a more financial light. Shining in the financial spotlight are two options that will forever be competing with one another when it comes to automobiles: the lease vs. the purchase.
While this is an extremely subjective topic, there are definite pros and cons to each and you shouldn’t dismiss one just because of the initial cost or because of the long-term commitments. Buying a car is hardly comparable to buying your first home, but let’s try and bridge the gap anyways; there are certain situations in life that call for renting a one-room basement apartment, and there are other times in your life where signing for a mortgage on a four-bedroom, two-story house is the best option. See my point?
There really is no right or wrong answer here; it’s about situational solutions based on individual needs, so keep that in mind.
Leasing
While some might see leasing as throwing money away, others see it as an opportunity to obtain an otherwise unobtainable dream: their own car. Technically, the car is never truly your own, but it is in your possession for a few years, at which point you can bring it back and leave with another brand new car. Now, doesn’t that sound inviting? No stressful selling process or harrowing mechanical bills (thanks to dealer warranties), just a hassle-free ownership that ends as pleasantly as it begins.
Pros
Get a better car Manufacturer warranty coverage
When it comes to buying a car, there’s always the fantasy and the reality. The fantasy usually consists of high-powered engines coupled with luxurious interiors, stylish designs and outlandish price tags; whereas reality often means mundane and practical with little excitement, but a price tag that won’t see you eating Kraft Dinner three times a day. But consider this: The payments on a brand new 2007 BMW 328i 36-month lease are $400/month versus $917/month on a 36-month finance. Does the dream seem real yet? Leasing a vehicle means you are only paying the amount the car is worth for the duration of the lease; whereas purchasing a vehicle means you are paying 100% of the car for whichever time frame you choose. The lease will always be the smaller amount, therefore the smaller monthly payment.
Having a car that runs well and requires little maintenance is often on top of the list when considering purchasing a brand new car. However, it does happen that even new cars have trouble along the way. If you choose to lease, you are also choosing to have the manufacturer remain responsible for workmanship and material defects in the automobile; they remain responsible for the structure and integrity of their vehicle. The terms will differ for each manufacturer; most will offer a time frame such as three years or 36,000km, whichever comes first, but the coverage is the same. While the same guarantee is offered to a financer, promotions and special offers often ensure that a leaser will never pay for replacement parts for the duration of their lease, and they usually get to give the car back before any major issues occur.
Car is always new
Who wouldn’t want a brand new car every couple of years? No matter how much you love or want a vehicle, the grass is always greener somewhere else. The automotive industry is constantly shifting, changing and upgrading. New models are popping up every year, so why settle on driving the same car for years and years? A lease allows you to own a car for a few years at a time knowing you’ll be left with zero responsibility at the end with the freedom to move on to the next mean machine. Leasing could be considered a form of dating — just be careful you don’t fall in love.
Cons
No money back
Getting a brand new car every couple of years without having to worry about selling your current ride seems great but, on the other hand, it almost seems like a waste to pay for something that’s never really yours. There you are pouring thousands of dollars a year into this thing on monthlies, gas and upkeep and what do you have to show for it in the end? Besides the memories, there’s not a whole lot left. Just like a needy girlfriend, a lease will suck you dry and leave you with absolutely nothing in return. There are the select few who can sell their leased cars for a profit (buy-back plus interest), but in a market where most do their homework, it’s a hard sale to make.
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