Which is better, Lease or Financing?
Leasing is a much better way than financing when buying a new car. As a lessee, you aren’t driving the vehicle that could expose you to high repair costs. You will never need to buy tires for a vehicle. You can always be on the cutting edge of new car technology. Elevated status of driving a new car. Financial savings operating a car during it’s best part of it’s life when fuel costs are at it’s lowest consumption levels. Only paying for the monthly depreciation on half the car, not the full price upfront. Paying the sales tax on the monthly payment times the term and not the entire vehicle upfront. Lower down payment required which gives you the option to invest that money in an appreciable asset, not a depreciating liability. No hassle of trading in a vehicle or negotiating the treacherous waters of selling a car in the private market.
Final reasons why you should lease a new car
It is a two or three year “test drive” with three options at the end of the lease term. This flexibility guards you against buying a lemon. Protects you from an unseen downturn in the estimated resale value of your car. Allows you to purchase the residual value of the car thus taking advantage of a sudden unexpected higher market value or just buying it cause you love it.
Financing is a ball and chain
Financing a car is a total gamble and almost guarantees you will always owe more than what a vehicle is worth considering the vehicle loses 25% of it’s value the moment you drive it out of the dealership’s parking lot. It is now a used car and 1 year old, even if you owned it one day in real time. The expected maintenance and repair bills in the 4th and 5th year of your finance term will usually add an additional $50 to $60 a month to your payment when you need to replace tires, O2 sensors and other expensive repairs not to mention the dreaded high cost timing belts and major interval maintenance milestones. After the initial manufacturers warranty expires, you will legally own and be responsible for any repair, even if the car was to unexpectedly break into two pieces. You would own both halves.
You will hear the old school cavemen say that financing is better because you own something rather than renting it. Don’t believe them, they are as dumb as they look. Owning a depreciating liability is a mistake almost every time. Let someone else be locked into a car that by every mile is headed towards it’s demise. Own the flexible options that leasing affords and stop doing what others have wrongfully done for years. Because, at the end of 5 years, you own a car with an odometer range of 80k to 100k miles and a value that most likely reflects 20%-30% of it’s original value. It’s a bad investment. And once that odometer clicks 100k, I dare you to find someone willing to pay you a premium for the car. Lease a car every two years and enjoy life, we owe it to ourselves.
The Golden Rule: Buy anything that appreciates and lease anything that depreciates.
***Any specific questions, please write them in the comment section and I will be happy to answer them and maybe address a future article on it. Thanks for taking the time to read and comment.
Subscribe to Tom Reddy articles – -make sure you click the subscribe button in the yellow box, you can unsubscribe at any time through any sent email and your email address will not be shared with anyone.
More content from this contributor:
Have Aliens Already Visited Earth?
I Received My AARP Card in the Mail, Happy 50th Birthday
NetFlix Vs. Amazon Prime, Who is Winning the Streaming War?
Kevineats is My Favorite Food Blog