Your finances Affordability is clearly key,
and you need to ask the question of how stable is your job and how healthy is
your general financial situation. The short-term monthly-cost of leasing is
significantly lower than the monthly payments when buying: you only pay for
“the portion” of the vehicle’s cost that you use up during the
time you drive it.
If you have a lot of cash upfront, then you can opt
to pay the down payment, sales taxes - in cash or rolled into a loan - and the
interest rate determined by your loan company. Buying effectively gives you
ownership of the car.
However, if you want to get into a luxury model
but can’t afford the upfront cash, then perhaps you’re a good
candidate for leasing. Unlike buying, it gives you the option of not having to
fork over the down payment upfront, leaving you to pay a lower money factor
that is generally similar to the interest rate on a financing
loan.
However, these benefits have a price: terminating a lease early or
defaulting on your monthly lease payments will result in stiff financial
penalties and can ruin your credit. You need to make sure you carve out the
monthly lease payment in your budget for the foreseeable future, at least for
the duration of the lease.
Your own particular lifestyle choices and
preferences. Think about what the car means to you: are you the sort of
person to bond with the car or would you rather have the excitement of
something new?
If you want to drive a car for more than fives years,
negotiate carefully and buy the car you like. If, on the other hand, you
don’t like the idea of ownership and prefer to drive a new car every two
to three years then you should lease.
Next, factor your transportation
needs: How many miles do you drive a year? How properly do you maintain your
cars? If you answer, “I drive 40,000 miles a year and I don’t really
care much about my cars as I don’t mind dealing with repair bills”,
then you’re probably better off buying. Leasing is based on the assumption
of limited-mileage, usually no more than 12,000 to 15,000 miles a year, and
wear-and-tear considerations. Unless you can keep within the prescribed mileage
limits and keep the car in a good condition at the end of your lease, you might
incur hefty end-of-lease costs.
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