Buying v. Leasing a Car: What is the Best Fit for You?

Posted on: in [ Budgeting, Personal Finances, Savings ]

Buying v. Leasing a Car: What is the Best Fit for You?

Selecting a new car can be a whirlwind experience! From roaming the car lots, to choosing your upgrades, and enjoying that “New car smell,” nothing says happiness like driving with the windows down in a new vehicle. A growing trend for automotive customers is to consider whether to buy or to lease. Each has different benefits and set-backs, and at State Bank we want to help you make the best decision for you and your family!

 

Buying the vehicle:

 

In this scenario you work with a financial institution to secure the financing for your new ride, or you pay cash for your auto purchase. You are at the minimum responsible for the initial down payment and additional monthly loan installment. Once you drive off the lot, the car is yours to keep so long as you keep current on your payments. Should financial times hit you hard, you always have the option to sell your vehicle to cover the remainder of your loan. Since the vehicle is your personal property, you can customize it, drive it, and repair it however you see fit. The only downside is, should the car be damaged in any way you alone are going to feel the effect of decreased value.

 

Leasing the vehicle:

 

Alternatively, when you choose to lease your car, you are responsible for the first month’s payment in addition to an initial deposit. Each month you will be paying the cost of depreciation, and are restricted to set amount of miles each year. These payments are typically lower than when purchasing a vehicle, but if you choose to end the lease early, you may be stuck paying the remaining months depreciation. At the end of your lease, you walk away after paying the end-of-lease costs with no ownership in the vehicle. You are then able to lease a new vehicle or purchase your leased vehicle for the remaining value minus depreciation. Unless you purchase the vehicle, you are not allowed to customize any portion of the car, but simply decorate it with non-damaging interior additives such as a steering wheel cover.

 

The most common option for new car buyers is to purchase the vehicle using a personal loan. However, if you enjoy riding a new car each year, leasing may be a more affordable option for you. If you have additional questions on buying or leasing a car, stop by and one of our personal bankers would be happy to assist you! 

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