When it comes to purchasing a car, there are two main options: buying or leasing. Both have pros and cons, and it’s important to weigh them before making a decision.
You should lease a car if…
1. You want to pay as little as possible up front
Leasing a car typically requires a smaller upfront payment than buying a car outright. A car lease can be a good option for those who don’t have a large sum of money saved up for a down payment.
2. You’re confident in your credit history
In order to lease a car, you’ll need to have a good credit score. This is because leasing a car is essentially borrowing money from the dealership or leasing company to pay for the use of the car. If you have a good credit score, you’re more likely to be approved for a lease and get a better deal on the terms of the lease.
3. You’re not paying for a mortgage
If you’re already paying off a mortgage or other large debts, it might not make financial sense to take on another large payment in the form of a car lease. In this case, it might be better to buy a car outright or opt for a more affordable financing option.
4. You don’t travel a considerable amount of kilometres
Leases typically have kilometre limits, so if you drive a lot, there might be better options than a lease. If you only use your car for short trips or have access to other forms of transportation, a lease might be a good fit.
5. You can claim your car as a business expense
If you use your car for business purposes, you may be able to claim the costs of leasing it as a business expense on your taxes. This can make leasing a more attractive option.
6. You’d like to replace your car every 2-3 years
Leasing a car allows you to upgrade to a newer model every 2-3 years, which can be appealing if you like to have the latest and greatest technology in your car.
You should buy a car if…
1. You’d rather pay more upfront to shrink your monthly payments
If you have a large sum of money saved up, you may be able to use it as a down payment to reduce your monthly car payments. This can be a good option if you have a tight budget and want to keep your monthly expenses as low as possible.
2. You’d rather your credit history go un-scrutinised
Buying a car doesn’t require a credit check, so if you have a less-than-perfect credit score or don’t want to risk damaging it further, buying a car might be a better option.
3. You have a mortgage
If you’re already paying off a mortgage or other large debts, it might make more financial sense to buy a car outright and avoid the additional monthly payments of a lease.
4. You drive a lot of kilometres
As mentioned, leases typically have kilometre limits, so if you plan to drive a lot, buying a car might be a better option. This way, you won’t have to worry about paying extra fees for going over your mileage limit.
5. You can’t claim your car as a business expense
If you can’t claim your car as a business expense on your taxes, leasing is not the most cost-effective option. In this case, it might make more sense to buy a car outright or opt for a more affordable financing option.
6. You would prefer to keep your car longer than three years
Leasing a car means you’ll have to return it after 2-3 years, at which point you’ll have to start the process over again.
In conclusion, whether you should buy or lease a car depends on your individual financial situation and priorities. Leasing a car can be a good option if you want to pay as little as possible upfront, have a good credit score, don’t have a mortgage, don’t drive a lot, can claim your car as a business expense, and want to upgrade to a newer model every 2-3 years.
On the other hand, buying a car might be the better choice if you’d rather pay more upfront to shrink your monthly payments, don’t want to undergo a credit check, have a mortgage, drive a lot, can’t claim your car as a business expense, or you want to keep your car longer than three years. It’s essential to carefully consider your options and do your research before making a decision.
Regardless of whether you lease or purchase your next pride and joy, you’ll need an independent, reputable and reliable mechanic to service your vehicle! Contact the experts at Robert St Automotive!