Purchase vs Lease

Can't decide if you want to lease or buy a car? What’s the difference? What are the benefits between leasing and buying?
Read on to find out if leasing or buying a car is right for you.

How long do you want to keep the car?

Ask yourself this question; do you plan on keeping the car longer than 3 to 4 years?
If YES, then your best option is to buy as at the end of the finance period, you own your car. It is yours to do with as you wish. You can drive it as far and as tough as you like. When you own your own car, you no longer have monthly payments to make to your lender. You may also be able to save money by removing collision coverage from your auto insurance policy.

If NO, then your best option is to lease. If you trade cars frequently, you are throwing away money. With a lease you only pay for the car’s depreciation, not the entire car. A car depreciates in value during the first year, and continues to depreciate rapidly until the third or fourth year.

Your monthly payments are much lower and you can free up your cash to invest in other areas as required.

Novelty

If you relish having a new shiny car to show off or love the “new car smell”, then leasing is for you.

Maintenance

Leasing a car allows you to drive a new car which means you are unlikely to run into maintenance costs. So you have little worries of breaking down on the freeway.
Also, many dealerships will give you free maintenance packages such as oil changes, tire rotations, etc. if you lease a car from them.

General Pros & Cons

Weigh the negatives of a lease prior to signing. If you drive over say 30,000 kms per year, you should probably negotiate this into your lease agreement; as incase you go over your mileage limit, you may have to pay a substantial penalty.

You have to lease another car at the end of the previous lease. Plus, you consistently pay for a new car every 3 to 4 years.

With most leases, you may often have to make a substantial signing.

If you use your vehicle for a business purposes, it can be considered as a business expense.

Dealers often offer incentive or reduce / eliminate signing fees.

Remember, you must take care of the leased car because it is not yours. Think of it as a 2-year rental car – you break it; you buy it!