Key takeaways:
- When you lease a car, you essentially lease it out for a predetermined time.
- You do so outright when you purchase a car and accumulate equity via regular payments (if you finance the purchase).
- Leasing often includes fewer upfront costs, smaller monthly payments, and no hassles associated with selling.
- Benefits of owning include having a car of one's own, total control over mileage, and a clear understanding of expenditures.
- Whether to lease or buy an automobile depends on your needs and budget.
It might be challenging to decide between leasing and buying a vehicle. On the one side, buying implies larger monthly expenditures, but in the end, you become the owner of an asset—your automobile. Whereas leasing provides smaller monthly payments and enables you to drive a car that may cost more than you can afford, you enter a cycle in which you continue to pay for the car.
But don't worry! Glendale Nissan brings a guide in which we will discuss the pros and cons of leasing and buying cars so that you can make an informed decision about which option is best for you.
A Closer Look: Leasing a Car
Leasing a car is when you make payments to use a car for a set period, typically two to four years. At the end of your car leasing term, you can:
- Purchase the vehicle for its predetermined price.
- Lease or buy another new Nissan model.
- Simply return the vehicle and walk away with no further obligations.
The Upside of Car Leasing:
Higher-End Vehicles:
Some people decide to lease a car so they may drive more expensive vehicles for more affordable monthly payments. Furthermore, drivers may readily and regularly update their vehicles with a two- to three-year automobile lease.
Lower Monthly Payments:
Lease terms typically last two to four years. This shorter time horizon results in lower monthly payments than if you were to finance a vehicle for a five-year or longer auto loan.
Fixed Maintenance Costs:
Leasing a car often includes factory-recommended maintenance services, saving money, and keeping your vehicle running smoothly.
Protection from Depreciation:
You may avoid unplanned depreciation by leasing. Your choice to lease will turn out to be a smart financial move if the market value of your automobile unexpectedly declines. You may often buy the leased automobile at a reasonable price after the lease and retain it or elect to resale it if the car maintains its worth well.
Manufacture Warranty Options:
Leasing a car often comes with the option to include the manufacturer's warranty in your lease agreement, which can protect you from having to pay for expensive repairs out-of-pocket.
Chance of Tax Deductions:
If you use your automobile for business, a lease can provide you access to greater tax relief than a loan. This is due to the IRS allowing you to write off the financing expenses and depreciation included in each monthly payment. The amount you may deduct may be restricted if you're leasing a fancy car.
The Downside of Car Leasing:
No Ownership:
The major downside to leasing a car is that you have nothing to show at the end of your term. All of the money you've paid into your lease has gone towards paying for the use of someone else's car.
Mileage Restrictions:
Leasing companies generally put a mileage restriction on leased vehicles. You'll be fined per mile if you go beyond this limit.
Lack of Control:
Lease agreements generally forbid making any changes or modifications to the car. If you prefer to customize your vehicle, this can be an issue.
Higher Insurance Costs:
Since leased cars are more expensive, they also tend to have higher insurance costs.
Buying a Car: A Closer Look
You pay the entire sticker price upfront or through a loan when you buy a vehicle. Once you have the automobile, you are the only owner and are free to do anything you want. However, a brand-new automobile might be expensive. Data from Kelley Blue Book shows that in February 2022, the average price of a new car was over $46,000.
Used vehicles and certified pre-owned vehicles are two other options you could go for. You can usually get a used car for a lower price, but it may not have all the bells and whistles of a brand-new model.
The Upside of Car Buying:
No Wear And Tear Restriction:
Unlike those who lease a car, you are not responsible for mileage or wear and tear charges. Since you are the owner, you may decide when to pay for maintenance and repairs.
No Mileage limits:
You won't need to monitor your mileage after you buy a car. You won't be charged extra if you travel across the nation or clock up 100,000 miles in a calendar year.
Potential to Sell or Trade-In:
You won't need to consider what to do when your auto loan is fully repaid because the vehicle is already yours. When you're ready for a new vehicle, truck, or SUV, sell or trade it in at its current market value, depending on miles and condition.
Lower Insurance Rates:
Owning a car usually comes with lower insurance rates than leasing because the latter is considered a higher risk.
You Can Customize Your Car:
You can add aftermarket accessories or make other changes to a car you own. Leasing companies won't allow this as it could potentially lower the vehicle's resale value.
No Long-Term Commitment:
Leasing terms are usually two to four years, so you're not locked into a car for an extended period.
The Downside of Car Buying:
You're Responsible for All Repairs and Maintenance:
If something goes wrong with your automobile, you're on the hook for fixing it. Leasing companies cover routine maintenance and most major repairs.
Higher monthly payments:
Although you'll eventually own the car outright, your monthly payments will be higher than if you were leasing.
Rapid Depreciation:
It depreciates as soon as you drive a new car off the lot. You're essentially paying for something worth less and less every day.
Ending Note:
Ultimately, leasing and buying a car comes down to what makes the most financial sense for you. Leasing may be ideal if you don't have the cash to make a large down payment or if you're not planning on keeping the car for more than a few years. Buying may be a great option if you're looking for a long-term investment or want to avoid mileage and wear-and-tear fees. Whichever path you take, shop around to ensure you receive the greatest rate.
At Glendale Nissan, serving West Covina, CA, we have an extensive selection of Nissan vehicles for you to browse. You can find used and CPO vehicles as well.
