[quote]Should I buy or lease a car? I’ve never leased a vehicle before, but some of my friends lease theirs. It’s something I’m considering, but I just need more information. [/quote]
I get this question a lot. There’s advantages and disadvantages in both leasing and buying.
Let’s go over the advantages and disadvantages of both.
It’s funny how many people I still run into who are scared of leasing (because they have no personal experience with it, or they know someone who has had a bad experience).
As a Salesman, I always ask the same questions of every person who is looking to purchase a car, in order to determine if leasing is a better option.
How long do you tend to keep your cars?
The average consumer looks to trade or sell their current vehicle every 36-48 months. With more people keeping their cars longer, due to the current condition of the economy, or because they bought last time and have too much negative equity to roll into the next loan, they find themselves stuck in a vehicle they no longer enjoy.
Leasing is great in this instance. You get a new car every few years, and the manufacturers often incentivize you to keep coming back.
How many miles do you drive per year?
This is a key question, the consumer typically has no clue how many miles a year they actually drive.
I like to ask the follow up question of “How many times a month do you fill up for gas?”
I can usually do some quick math based on the type of car, size of the gas tank, and mileage per gallon. This can help me determine if a 10,000 mile per year lease would work (or if we need to look at the cost of a 12,000 or 15,000 mile per year lease).
What kind of budget are you looking to stay in?
The math is the math.
The dealer can’t magically make a $27,000 car into a $250 payment on a purchase with zero money down, at 60 months… even with perfect credit. You’re probably closer to $450 a month (with no tax or title fees included). Thus, leasing is a more affordable payment option.
Leasing also has huge cost advantages when it comes to servicing your vehicle. Leasing (with manufactures like Volkswagen, Volvo, GMC) allows the vehicle to be covered in full warranty the entire time it is being leased. You are also seeing more and more manufacturers offering a Maintenance Package (to cover things like oil changes and tire rotations), allowing you to basically pay your insurance and the payment.
See? Leasing is pretty awesome! And you can get a brand new whip every two to three years (resulting in you becoming the neighborhood “Joneses”).
Within those three questions, we can decide if they should lease, or we can move the conversation to buying.
Do you keep your car for a long time?
If you do keep your car’s a long time, buying is perfect for you! And, with the rates being so favorable for consumers this time of year, it’s a great opportunity to own your vehicle in five to six years.
Do you put a lot of miles on your vehicle?
If you drive a lot of miles for work, or family, buying may be the better option for you. A lease can become very costly when you turn it in to the manufacturer, and you have gone over your miles. You’ll be charged for every extra mile you put on it. Ugh.
- Put money down. Just like any major purchase, you’ll want to put the most down upfront. If you do this, you’ll finance the smallest payment, thus resulting in less interest being charged throughout the life of the loan.
- Buy an extended warranty. You’re only doing yourself a disservice if you don’t. In the long run, this is a machine, and it will eventually require service. It may not happen the first 2 or 3 years, but something will eventually break, and a service warranty will protect you after the manufactures warranty expires. The good news is, the majority of extended warranties are very affordable, and if you get rid of the vehicle, many times you can get a prorated refund for any unused months left (ask your Finance Manager for more details).
- Have your maintenance performed at a dealership. Nothing is worse than taking your car to someone who says they know how to fix your car and then voids your warranty by doing something wrong. Yes, this does happen. Dealerships are trained and certified by the manufacturers, so you don’t have to worry about something happening that would cause our warranty to be voided.
Buying will always be popular. It’s the lifeblood of the industry because there is truly nothing like owning something and having no payment down the road. Your ride truly becomes your baby. The first car I ever owned was named “Jenny” after Jenny from Forrest Gump, and I loved her.
Buying vs. Leasing is a debate that will not soon disappear. Every situation is different, so it’s always best to allow your Salesperson to be a personal consultant. After all, they are the experts, they will help guide you down the path of buying or leasing your next car.
Andy Parish is a Sales Consultant for Ed Schmidt. He resides in Northwest Ohio, and is a proud graduate of St. John’s Jesuit High School and Owens Community College. Andy has many years of sales experience, great teeth, and prefers long walks on the beach over watching Sports Center. We’re kidding. He loves his Sports Center. Connect with Andy on LinkedIn.