Pros and Cons…. Which Works For You?

Whichever you choose, buying or leasing, there is a ‘down payment’ involved.  If you already have a car you’re trading in, that is your down payment whether you choose to buy again, or lease.  If you don’t have a trade-in, you need to put a down payment of cash (an amount you choose) on a purchase. But if you’re leasing, the ‘down payment is a given figure by the dealership.

Cars are very pricey, and are usually put on a financial payment schedule at the time of sale. The length of the loan varies, typically from 2 – 7 years … so choose whichever time frame and its’ cost fits into your budget.  However, when choosing you don’t want to choose say a 7 year loan if you intend to trade it in sooner, leaving you with a balance on the car you will no longer have.The best loan length is probably 2 – 5 years. Then if you choose to trade it in, you have the full amount of the trade in value to put towards your next purchase (a larger down payment).

But buying isn’t for everyone.  When leasing, the dealer sets the cash down payment, and a 2 or 3 year lease. The monthly payment is usually cheaper than a purchase loan, but when your lease is up, you have no car to trade in, so you start again from scratch with a down payment for your next car. Continuous leasing also means you will always be paying a monthly bill for the lease, whereas a purchased car will, when the loan is paid off, you will have the car and its’ trade in value to use towards your next car.

And remember, you don’t need the top of the line, nor do you need all the bells and whistles.  A car with good brakes, a gas tank, and comfortable seating will get you from point A to point B just as well….and the insurance and excise tax will cost somewhat less each year.

So figure out what works best for your budget….. and…..happy and safe driving!