Lease offers can look very attractive to shoppers in the market for a new car. But a low monthly payment isn’t the only factor to evaluate when deciding whether to lease or buy a new car. Instead, ask yourself the following six questions to determine whether leasing is a better fit than buying for your situation.
1. Do you drive a lot? Lease agreements generally have annual mileage restrictions. If you drive far, often, you may end up paying a per-mile fee for exceeding these limits.
2. Do you expect the car to go through a lot of wear and tear? If you’re rough on cars, or have pets or children who are, you may not want to lease since you have to pay extra fees when the car is returned with excessive wear and tear.
3. Do you like to get a new car every two years? If you’re a serial car buyer, then it may be fiscally responsible for you to lease. When you lease, you pay for only a portion of the car’s initial value, which results in cheaper payments and shorter lease terms.
4. Do you like to customize your vehicles? If you’re a nut for customization, then you may not want a leased vehicle that restricts the kind of modifications you can make or requires you to remove custom parts before returning the vehicle.
5. Do you look forward to a time when you won’t have car payments? When you get a loan to buy a car, you know that eventually, you won’t have payments anymore. When you lease, you won’t ever own the car and at the end of the lease term, you’ll likely jump right into another lease or loan situation.
6. Are you ready to negotiate? Whether you lease or buy, you still need to do some negotiation. It’s just as important to negotiate a purchase price (or capitalized cost) for your leased car as it is to do so with a purchased car, because that will determine your monthly lease payment as well as your end-of-lease buyout price.
Have you ever leased a car? Is there anything you wish you’d done differently?