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Buying a Car or Leasing It

Many people consider leasing a car as an unattractive offer. Why is this so? It has many points to its favor. You can get a car after every few years. You will have to make cheaper payments and it is quite easy to obtain an auto financing from a lending institution. Then why do people find it unattractive?

 

Should you buy a car or get it leased?

 

Consumer advice editor at Edmunds, Phillip Reed indicates that the decision as to whether getting a car leased or buying it does not greatly depends upon finances. It is also dependent upon the lifestyle. Those who like to drive every new model of a car find leasing option to be appealing as they will have to make lesser payments along with the opportunity to drive New Car Deals Houston which would not be possible to be paid outright.

There are many aspects to lease which makes them a good option over Kia Car For Sale USAFor instance, the down payment is very low and the monthly payments are also relatively cheaper. Moreover, obtaining an auto finance loan is easier as well. In addition, maintenance cost is reduced to minimum as most of these cars have a warranty of three years.

Well, this was the good side, now the expenses side of leasing a car is in heavy relation with insurance. The insurance rates are higher for such cars as it includes gap insurance. Moreover, if you are turning out your car every three years, the down payment you will be paying will be coming from your pocket. The depreciation value of the car is another factor which reduces the resale value of the car. In order to determine the actual value of the car, determining the real life of the car is important. 

Actual costs of leasing or owning

 

When deciding upon buying or leasing the car from the financial perspective, determining the cost of driving the car over several years is crucial. Down payments, monthly installments, insurance, maintenance and taxes are incurring expenses which are added in the total cost of the car and which usually exceeds the asking price of the dealer. 

 

For instance, Edmunds evaluated a new car of $20,000 financed with a 3 year lease at 6%. The results after 5 years were that the real price of buying the car was slightly higher than leasing it. Adding in the down payments, monthly payments, insurance, maintenance, state fees, taxes and interest, the cost of ownership totaled to be $32,388 for years. Under similar circumstances, the cost of leasing a car for the same period totaled to be $32,140.

Although, this scenario might be an affordable way however, the question is what happens after 5 years? If you are a seasoned car owner then it is fine but not many people drive a car for 5 years only. The same situation is repeated with a 10 year life span now.

 

Under a lease agreement, you are starting again after three years. Down payment is made, insurance rates and low cost of maintenance is covered however, leasing a car does not build equity as is the case in owning it. After 10 years, the insurance has reduced; maintenance costs have increased and the largest financial burden – monthly payments – have been finished. But when you add up all the payments made, you will definitely see that you have paid a lot more than what would have been paid in owning it.

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