Why Loaning Is Better Than Leasing

loaning better leasing Why Loaning Is Better Than LeasingTo buy or lease? That seems to be a pressing question for many people who are considering a new vehicle. It used to be that the only way to have a new vehicle was to purchase it, either outright or via a vehicle loan. But now leasing is also an option and many people choose it for their vehicle needs. It may seem like a great plan to have the option of driving a vehicle for a specified period of time and know that in your contract most maintenance and major repairs are covered at someone else’s expense. But there are other factors to consider when deciding whether to purchase or lease a vehicle.

First off, leasing a vehicle usually requires a sizeable down-payment, often several thousand dollars. The monthly payments may be small to medium in size, but the initial cash outlay can be quite substantial and should be considered. Most people with a lump of cash available up front could qualify for an auto loan and purchase their vehicle outright rather than leasing.

Second, Lease agreements frequently place usage limits on the vehicle being leased. For example, there may be a mileage limit per month or per year, and exceeding those limits will result in over-mileage fees. There are also sometimes limits on service or repair based on the usage of the vehicle. For example, a lease agreement may refuse to cover air-conditioning service for a vehicle leased in Seattle if the vehicle is used for driving long distances through Arizona and Nevada because it is assumed that the vehicle will be used in the area surrounding Seattle where air conditioning does not require as frequent service.

Third, at the end of a lease period, you turn in the car and get a different one. Whatever finances you invested in the down-payment and monthly payments during the lease period are basically gone, and you have no way of securing any return at all on those finances as an investment. If you invest the same funds in a vehicle that you will eventually own yourself, you can always recoup some of those funds through the sale of the vehicle if you choose to do so.

Last, many people simply prefer ownership over rental, and to many people that is a fair comparison of purchasing versus leasing a vehicle. In the long run, it is all a matter of personal preference and it will be up to the individual whether to buy or lease their vehicle. But purchasing does seem to have more advantages, considering all the factors involved.

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