While the economy is turning around the economic climate is still tough so it’s not surprising that many people are exploring alternative ways of living, in order to save a few dollars here and there. Cars have especially been in the limelight recently, with many US citizens shaking their heads with despair at spiraling fuel prices, expensive car repair costs and all the other myriad of issues, all of which seemingly custom-designed to shrink the wallet and drawn your bank account. It’s little wonder that many people have been exploring alternative ways of getting from A to B, including alternative car sharing services like Relay Rides and innovative parking solutions like Parking Panda. Something a lot of people consider is car leasing, but is leasing a car more cost-effective than buying? Is there any situation where leasing a car can work wonders for your wallet, or does it actually have an adverse effect on your finances in the long term? And most importantly, when committing to leasing a car, how can you make sure you get the best deal going?
Leasing vs Buying: The Facts
Initially, it might seem like a bit of a ‘no-brainer’. When purchasing a car, no matter how incredible the feeling might be, driving it for the first time and knowing it’s entirely yours, there’s no escaping the fact that you’ve just committed yourself to a considerable cash investment and there is virtually no chance of ever seeing a good return on it. (Unless you bought a Ferrari.) Whereas, leasing a car is almost like a ‘pay as you go’ option, with only a monthly payment to factor into your budget and there is not as big of an upfront cost. But is it really this clear-cut? The answer of course, is no.
Car Leasing: The Advantages
- Repair Costs. This, of course, is a significant attraction for a lot of people. One of the least appealing aspects of owning a car is the problem of having to spend money to keep it running. When leasing a vehicle, this issue becomes a blissfully distant memory, though be aware, terms and conditions regarding the exact problem with the car may vary depending on the least contract.
- Getting the latest model. For car fanatics and gearheads, this can be a real perk of leasing since you can upgrade to a new car more often. Tired of the model you’re driving at the moment? When the lease is up, simply trade it for the next one, a fantastic shiny new car, without any of the major investment of buying it outright.
- Flexibility. Leasing allows you the freedom to change cars after a relatively short period of time, rather than committing to the same vehicle for many years. A lot of people prefer to switch cars every year or two anyway.
However, sadly, though leasing might work for some people, there are a few very good reasons why leasing might not be the financial solution that you’re looking for.
Why Car Leasing Sucks
Sadly… leasing is not a good deal for most people and here are a few reasons why;
- Long term costs: Rather than looking at the initial advantages of paying less upfront you need to think of other factors like your car insurance and vehcile payments which you will always have. Often, when you compare the figures over an extended period of time, those leasing their vehicle rather than purchasing, end up paying significantly higher sums of money, sometimes thousands of dollars more, over the course of their lifes.
- You Don't own the Car: Another factor to take into consideration is the lack of possessing anything when you pay money each month for something. Of course, cars tend to depreciate in value the moment they leave the showroom, but there is something rather frustrating about the thought of having invested considerable money, with nothing to show for it at the end.
- High Insurance: Regrettably, those who lease, rather than buy a car, will end up paying more for insurance, regardless of the deal that you find. A factor that can put people off leasing in the long run since you always have a new car, which is nice, but you are always paying insurance on a fairly new car. It’s always worth shopping around, just to make sure you find the best insurance plan available to you and a deal that best reflects your needs.
It Pays to Do the Research…
Ultimately, it’s a good idea to make sure that you explore all your options before committing to lease or buy a car. When deciding between leasing vs buying try to project into the future, taking into account considerations such as repairing the vehicle, what would happen in case of theft, and whether your personal situation is likely to change. People often need to get out of a car lease in the middle due to the fact they are having a baby.
Do you find that you hardly use a car at all? Then perhaps renting a car on a daily basis, with a service like Relay Rides, might be a more ideal option. Sounds crazy? Perhaps not. Whatever your decision, make sure to do your research first and make a wise decision. Cars are big investments whether you are leasing vs buying.