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Buying vs. Leasing |
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When faced with ever-increasing
automobile prices that seem to have skyrocketed since your last
new vehicle purchase, it is hard to abstract what your monthly
budget will permit: a $20,000, $25,000, or $30,000 purchase? Is
leasing a viable option for you?
Factors like big
rebates and zero percent financing have complicated the decisions, often
making it difficult to compare vehicles within a segment. Go for the
savings now, or pay more for a vehicle that promises greater
resale/residual value? |
Just when you are
getting discouraged, an attractive lease price grabs your attention in
one simple tidy number: $399 a month. We can relate to that quite
easily, hence part of the allure. Some quick calculations reveal that
same vehicle would cost a couple hundred more a month, for an additional
year, to purchase. So is leasing a good deal and is it for you?
Advertised leases
boast outstanding monthly payments in contrast to traditional purchases
because you pay for limited use (essentially the
depreciation
plus finance charges during the term). Consider it an extended rental
contract. Typical leases run 24 and 36 months, putting a new vehicle in
your driveway at regular intervals, always protected by manufacturer
warranty. Simply enjoy driving a new vehicle that makes you the envy of
neighbors, then drop it off at the dealer when you are done.
Beware: this leasing cycle may
be hard to break, since you do not have a trade-in to apply toward a
purchase, and vehicles aren't getting cheaper.
As much as we would like to plan our economic
future, sometimes the here and now must take precedent. Leasing offers
the opportunity to acquire a vehicle worth more than you could afford to
purchase outright. But because vehicles suffer their greatest
depreciation hit the first two years, leasing is destined to be more
expensive than purchasing in the long run.
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