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When the time comes to get a new car, the typical path for most consumers is to get a loan, trade an old car in, and buy a vehicle outright. Many consumers will tell you that leasing a new car also offers some desirable advantages. But which option is best?
The answer is, keep your current car repaired! This is a terrible economy to have to take on a car loan or even a lease. Invest in keeping your current vehicle to last as long as possible. But when that's not possible, you must find that option that is best for YOU. The pros and cons of buying vs. leasing will not boil down to one single choice. Rather, the decision you make should take into consideration all the variables of your own life, what you will have to sacrifice, and what you will come away with.
Buying a new car is the transportation you own and has a level of certainty to it. You can use it comfortably without worrying about repairing minor damage to its appearance along the way. You may also customize it, put your bumper sticker on it, or upgrade the car stereo as you see fit. It's yours (but certain changes may void your warranty).
In this case, you're either buying it outright for cash or getting a loan, which is money borrowed against the ownership of the vehicle. Loan payments are typically higher than lease payments because you are claiming the equity in the car. Since you will gain equity as you go, it will offset costs if you decide to sell or trade-in your vehicle later. And the longer you have it, the more the equity you are paying for will depreciate.
In leasing a car, it's not your property. It is borrowed for a legal term. However, you are ultimately responsible for returning the car in the condition it was leased under, which may mean paying to have bumper stickers or decals removed.
You are primarily paying for the depreciation of the vehicle rather than the vehicle's ownership, so the costs are considerably lower to lease. You won't have trade-in value built for later—you will return it with no bump to offset expenses on your next vehicle.
In a Consumer Reports feature, money expert Octavio Blanco breaks the choices down to four types of drivers and their specific place in life: The Road Warrior, The Freshman, The Early Adopter, The Ding King, and the Penny Saver.
Road Warriors are using their cars for their work (or have long commutes), and those miles will begin to accelerate the car's depreciation. Most leases have mileage limits to recoup this loss, usually in the 10,000 to 15,000 range. If you rack up 20,000 miles in a year with your car, you'll pay more for a lease without retaining equity. Road Warriors should buy.
The Freshman is a new driver with little or no credit history yet. Think of people going off to University, or graduating university students with new jobs who don't have much experience with car ownership yet. In this case, the better choice is leasing, as it gives the driver a manageable payment and a chance to test car brands and models for the best long-term fit. For people beginning new careers, paying less per month is vital if they're also paying off student loans. (Of course, if your mileage in your new job will be better than 10,000 miles per year, buying is still the better option.)
The Early Adopter is that person who wants fine things and enjoys a new car every two years. Leasing offers Early Adopters a chance to sample different cars with emerging technologies, like hybrids or electric cars, without being locked into the car's depreciation. Or, before the brand has an opportunity to prove itself on the highway.
The Ding King is someone who has a history of car bumps, dents, scratches, and so on, who is a little rougher and their car than they intend to be. They aim to keep the car, and they won't want to deal with the body repairs that come with returning a leased car. Ding Kings buy their vehicles outright and plan on keeping them until they no longer function, as damaged vehicles hold less value for the trade-in.
The Penny Saver is trying to eke out the cheapest option for themselves and puts that above all other issues. This makes leasing their best choice. They are trapped in an endless cycle of payments.
As always, you should read the fine print in any major purchase, from a dishwasher to an auto to a house. Here at LK's Auto Repair in Bremerton, we witness customers moving on from a beloved old car to a new one. While we want you to find the best path for you, we want to save your car and extend its life and value for as long as we possibly can, especially in our current times.
Visit the professionals at LK's Auto Repair in Bremerton… get the peace of mind that comes with letting our ASE-Certified auto mechanics service your vehicle. If you are looking for an environmentally friendly alternative, a shop that genuinely cares, and a team that is community-focused, LK's Auto Repair is your best bet. We are located at 5921 St Hwy 303 NE #100 Bremerton, WA 98311. Give us a call or schedule an appointment today!