Car Lease vs. Buying A Car
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Car Lease vs Buying A Car
Weighing Your Options
We at the finance center of Spitzer Chrysler Dodge Jeep RAM Cleveland know this debate all too well. Is it better to buy a car or lease one? It depends on which option best fits your needs. Let’s go over the basics, so you’ll be well-informed before coming to our Cleveland car dealership.
Pros and Cons: Car Leases
For the first side of the car lease vs buying a car debate: car leases. Let’s define our terms. Leasing a car is renting a car for an agreed upon amount of time, down payment, interest rate, monthly payment and a few terms and conditions. These are often referred to as the “lease terms” or “terms of the lease.”
- Leases can be for as short as 2 years and as long as 5 years. Anything greater than 2 years is considered a “long-term” lease.
- Down payments are aid at the start of the lease and are typically less than 20% of the car’s MSRP.
- Monthly payments for a lease roughly equate to how much the car will depreciate over the length of the lease.
The benefits of a lease are numerous. Your monthly payments are lower with a lease than with a car loan since you’re paying only the depreciation costs, which is great in itself, but those savings come with the added benefit of driving a brand-new car. Since leases are only for limited amounts of time, you’ll have the opportunity to upgrade to a newer, better car at the end of your lease, so you never have to commit to a car for life and can always have the latest technology and safety features. Leases also come with limited warranties so that you don’t have to worry about paying for basic maintenance and repair costs during the length of your lease.
The drawbacks of leasing are few but noteworthy. First, each lease comes with a mileage restriction that, if exceeded, will result in you paying more than you had initially anticipated (typically in the form of a 15 to 20 cents per mile charge.) If you don’t plan on exceeding the miles restriction, don’t worry about this.
If you don’t have a good credit score, then leasing a car may result in a higher down payment and higher monthly payments than you would like or an inability for a dealership to agree to leasing to you at all. If you have issues with credit reporting agencies, speak to one of the experts in our finance center to see what we can do for you.
If you get dings and scratches on your car or happen to damage it in a way that will require a lot of time to fix it, such as totaling it or irreversibly staining the interior, you’ll incur wear and tear fees that will surely result in you paying more than you intended on a lease. In that same vein, you may be expected to pay more in auto insurance costs on a lease than you would on a car you own.
In the short term, leasing a car is cheaper than taking out an auto loan. In the long run, leasing many different cars may end up being more expensive than buying a vehicle. Be sure to ask an expert in the finance center of our Cleveland car dealership to break down your options more thoroughly before committing to either.
More information on leasing a vehicle at Spitzer CDJR Cleveland:
Pros and Cons: Car Loans
For the other side of the car lease vs buying a car debate: buying a car. Many people want to own the car they drive. Buying a car can go 1 of 2 paths:
1.) Pay the entire cost of the car upfront.
2,) Pay a down payment and take out an auto loan to pay for the rest of the cost of the car.
Understandably, most people don’t want to pay for the entire cost of a car upfront. This leads us to taking out an auto loan.
Let’s go over the basics. Every auto loan has a loan amount, loan term and a few terms and conditions. It also comes with an interest rate, which varies from lender to lender.
Owning a car allows you to customize it, drive it as far as you like and sell it or trade it in when you’ve grown tired of it. You also don’t have to worry about incurring extra costs for damaging it, just the repair costs. With that also comes the freedom to select your own auto insurance and only pay for as much coverage as you think you’ll need. All in all, if you know you want to drive a car for a long time, a car loan is your best option.
The downsides of an auto loan compared to leasing a car are important. Your monthly loan payments for an auto loan are almost certainly going to be higher than the monthly payments on a lease would be. Also, buying a car means you’re committing to it for a good number of years. With that comes the understanding your car’s technology will be outdated over time, and that you’re fully responsible for all of your car’s repairs.
We’re Here To Help
We hope that this page answered any questions you had about the car lease vs buying a car debate. If you still have questions, please contact or visit our finance center today, and an expert in auto finance will explain anything you don’t understand.
For more information about all of our products and services, visit Spitzer Chrysler Dodge Jeep RAM Cleveland near Parma and Brook Park Ohio – the finest Cleveland car dealership.