For decades, buying and financing have been the most common ways to get a new vehicle. Recently, however, leasing has been gaining popularity. In fact, about a third of new cars in 2018 were leased instead of bought, according to statista.com.
While leasing has been a good option for many people, the question is, is it right for you? When should you lease, and when should you buy? The answer depends on your lifestyle, your budget and your vehicle preferences.
Answer these questions to help you make the best choice.
How much do you drive?
If you commute every day for work or drive long distances for vacations, leasing may not be your best option. Vehicle leases give a mileage limit, usually around 10,000 to 12,000 miles per year. Any overage means a per mile fee.
People 20 to 54 years old drive an average of 15,000 miles per year, according to the U.S. Department of Transportation. When you own your vehicle, you can drive as far as you like without extra fees, though you will be on your own for maintenance issues. You should also consider that the more you drive, the lower your vehicle’s resale value will be, something lease holders don’t have to worry about.
How much can you afford each month?
Lease payments are less than loan payments, on average, which means you don’t need to come up with as much money each month. They vary, based on the vehicle’s worth, its estimated rate of depreciation, the allowed mileage, taxes and fees, and the rent charge, which is a dollar figure on your contract similar to an interest rate, according to Investopedia.
When you finance a vehicle, your monthly payment is made up of principle and the charge incurred by your interest rate. However, your payments may also include any extra fees, including customizations, additional warranties or maintenance packages you bought.
Do you like to drive new cars?
If you like to have the newest thing on the market, with all the latest technology and modern amenities, leasing gives you the option to trade up without hassle every two to four years – depending on your lease length.
Ownership is less flexible, as you must sell your car to get rid of it, rather than simply turn it in and sign a new lease.
How much of a down payment can you afford?
The amount you can put into your down payment will change your monthly payment, whether you’re leasing or financing. However, it may make less sense to bring a large down payment to the table if you’re planning on turning your vehicle in within a few years.
Do you foresee changes to your lifestyle?
Financing or owning a car gives you the flexibility to keep it as long as you like or to sell it at any time. When you lease, you must stick to the terms of your agreement or risk paying early termination fees. If you plan on downsizing, moving, or expanding your family, you may find yourself with more or fewer vehicles than you need, without an easy way to change your situation before your lease is up.
Do you want equity in a vehicle?
One of the biggest differences between buying and leasing is that, with buying, you end up with a vehicle you can sell or trade in when you’re ready for a new car. Though the amount you can get for the car after owning it for several years likely won’t be what you paid, it can still be a significant step toward owning your next vehicle.
With leasing, you don’t own the car at the end of your term. At that time, you can either buy it or turn it in. Usually, you can’t sign up for more time in the same car. However, if you’re in the market for a used car, buying the car you’ve just finished leasing can be a great option because you know exactly how it has been driven and maintained over the last several years.
Whether you want to lease or buy, you can find the vehicle that works best for you by visiting Horne Mazda.
Horne Mazda is the only Mazda dealership within 10 miles of Sky Harbor Airport located in Tempe
Schedule a test drive online, call 480.725.0720 or stop in at the dealership.