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Leasing is becoming an increasingly popular way for many motorists to attain a new vehicle. If you are looking to get a new car every few years and money is not a concern, leasing is not a bad option. However, if you want to pay the very least for your vehicle and you are willing to keep your car for the long term, the evidence is pretty conclusive that buying a car is the far better option. To prove this, here are the top ten reasons you should buy a car instead of lease:
1) Cars Last Much Longer than the Average Lease Agreement
Unless you are planning on swapping out your vehicle well before it has hit its expiration date, buying a car is the more cost effective choice. So long as you are making payments on a car you have purchased, the vehicle is legally partially owned by the lender. Once you have it paid off, however, the car is yours and you don’t have to make any payments on it for so long as you own it. In many cases, a good car can last years past the point where you are finished making payments on it, meaning there is a long duration of time you do not have to pay a dime for your vehicle. If you choose to lease a car, there are no such periods where you do not have to make payments. So long as you plan on driving the vehicle for a while, buying is the more cost effective choice. Of course, you always have the choice of purchasing your leased vehicle, however at that point of course you have made the decision to buy and oftentimes you will have paid more for the car than if you had purchased it outright in the first place.
2) Leasing has Limits on Time and Distance
Lease agreements not only have limits on how long you can use the car, but also how many miles you can put on it. For example, a common lease agreement will be for 3 years/36,000 miles. If you decide to keep the car for the full 3 years but go over 36,000 miles you will have to pay a penalty for every mile you went over. At just 12,000 miles per year, leasing means you will really have to pay attention to how many miles you put on your vehicle, which is a hassle that many people prefer not to deal with. Alternately, even if you do not put many miles on your vehicle, you will still receive no reward for staying under your mileage limit. Budgeting mileage is one of the primary drawbacks of leasing a vehicle. You do have the option to exceed your yearly limit, but you will incur a fee for every mile driven over the yearly limit you negotiated with your lease.
3) Repairs and Modifications
If you lease a car, even though you don’t own it, you are still responsible to pay for any repairs that are not covered under warranty. That means that you will be forced to make an investment in a vehicle that you do not even own. Likewise, you are not free to modify a leased vehicle to your own liking. No custom paint jobs or a new spoiler. When you purchase a car, you are free to do whatever you like with it, and any repairs you have to make are an investment in a vehicle that you own. Also concerning repairs, buying a car gives you the freedom to decide what gets repaired and what doesn’t. If you put a scratch in a car you’ have bought, you have the freedom to decide not to pay to have it repaired. With a leased car there’s no such luck. Any damages beyond “normal” wear and tear means penalties that you must pay.
4) The Lease Contract Doesn’t Change No Matter the Circumstance
No matter what happens, you still have to pay the amount you agreed to in the initial contract. While most of the time this is not a problem, it is a major drawback in the case of an accident. If you get in a wreck and total the car you have leased, you still have to pay the full amount of the lease even if insurance doesn’t fully cover that expense. The solution to this potential issue is to get gap insurance, which will cover you for the difference between what the car is worth and what you owe when the car is totaled. Many lease agreements include gap insurance as an expense included in your lease payments, but it is not always included. If you do choose to lease, you should make sure you do have gap insurance. Gap insurance can also be purchased in you buy a car, but once you pay off the car, it is no longer necessary. Someone who moves from lease to lease will always incur that expense.
5) You’re Paying for Zero Ownership
Driving around the latest and greatest vehicle can be exciting, but at the end of the day you are going to end up having paid thousands of dollars with absolutely nothing to show for it. Sure, you have the option to buy the car at the end of your lease agreement, but doing this is much more costly than it would have been just to buy the car in the first place. Leasing a car does not allow you claim the vehicle as an asset or any of the other perks of actual ownership. When it comes right down to it, you are paying for the right to drive a vehicle that isn’t your own with no sense of actual ownership or the perks that come with it.
6) Buying a Car Means You can Sell it Later
Let’s face it, vehicles are not an investment that is ever going to go up in value. The minute you drive them off the lot they are going to be worth less than what you paid for them, and they aren’t ever going to go up again. With that being said, they are still worth something. When you buy a car, it is yours to keep for as long as you want and sell at any time you want. Buying a vehicle is already more cost effective in the long run since it will last much longer than the terms of typical lease, but when you factor in the fact that you are able to sell or trade-in a vehicle that you own, buying a vehicle just becomes that much more of a cost effective option.
7) Minimum Insurance Coverage on a Leased Car Is Often More Expensive
The monthly payments of a leased car may be less expensive, but the insurance you will be required to pay on that car is almost always more costly. The reason for that is that the dealer’s lease agreement often stipulates that you will need to have a level of insurance coverage than the state mandated minimum. Not that it is a bad idea to pay a little extra for the security of enhanced insurance coverage, but keep in mind that this extra level of coverage is not optional if you enter a lease agreement.
8) With Longer Lease Agreements, at End of the Lease Agreement You Have Almost Paid Enough to Have Bought the Car
Avoid long leases! The payments may seem cheaper, but at the end of your lease agreement you will almost always have paid about the same amount it would have taken to purchase the car outright. This is most true with longer leases, which can last as long as six years. If you encounter a dealer who tries to get you into a lease of over 5 years, you should be wary of doing business with that dealer – they may be trying to take advantage of you. A typical lease agreement is 2 to 4 years. The longer the lease, the more you pay in total for the car and the closer you come to paying the full purchase price of the car, yet at the end of the lease you do not retain the resale value of the car. If you purchase the car, you would have the option of selling the car and recouping some of your expenses once it is paid off.
9) Leasing has More Red Tape and Fine Print
Leasing a car can be a real hassle in regards to all the red tape and fine print. Want to make a minor modification to the car you’re leasing? You’d better check the contract first. When leasing a car, you are penalized for any damages beyond normal wear and tear, but what is defined as “normal” is up to the discretion of the dealership, and it can be very difficult to anticipate what they will decide to charge you for. Budgeting mileage is something we’ve already mentioned, but it is yet another hassle that someone leasing a car must deal with. If you don’t like the idea of worrying about every scratch and stain, or the idea of carefully planning out how many miles you drive, then buying a car that you can use in any way you please is the better option.
10) Buying Gives You the Pride of Ownership
This reason may be a bit more subjective than the others, but it still prompts many to choose buying over leasing. One of the big draws to a new car is the pride of ownership, and while driving a leased car is the same as driving one you bought, there is simply something missing. Having a brand new car that you can call entirely your own can evoke just as much pride and fun as driving that brand new car. Knowing that your car belongs to the dealership and that at the end of the lease agreement the dealership will take it back, steals away that pride of ownership and takes away half the fun of getting a new vehicle. For this reason and all the others listed, it’s simply better to pay a little more each month and buy a car that you can proudly call your own.