One of the biggest questions many people face when looking at new vehicles is whether they should lease or purchase. This decision is always your choice and you should never be pressured into making this decision before you get all of the information you need to understand all the requirements and benefits of each choice.
Leasing Your New Vehicle
When leasing a vehicle you are agreeing to pay for the use of the vehicle and then return it at the end of the lease. Basically you can consider leasing a vehicle in the same class as renting however if you were to rent a vehicle over and extended period of a few years the cost would be much higher.
Because car dealers will expect to sell your leased vehicle when you return it you will have restrictions placed on the types of modifications you can make and the amount of miles you can drive.
You will be expected to have insurance on your leased vehicle and if repairs are necessary your dealer may have restrictions on the type of products and repair businesses that can work on your vehicle. You will also need to comply with scheduled maintenance.
If you purchase your vehicle for personal use you can not also use it for commercial use. Commercial Leases are available but you must state your intended use of the vehicle at the time you sign your lease.
Hidden and End Charge Fees
Since you are leasing your vehicle and do not own it there will come a time when you need to return it. End of lease charges have often been though of as approaching the level of a scam by many first time car leasers but the fact is when you sign the agreement you must live up to your side of the terms.
Car Damages including body work, dents over 2 inches, damage to your interior, broken items that have not been repaired or items that have been repaired but not with correct materials will cost you when you return your vehicle. The average Car Lease customer pays $1.500 in damage fees when they return their vehicle. This is one reason paintless dent repair has become so popular.
Any significant damage must be disclosed when you return the vehicle and expect the dealer to do a search of the vehicle for insurance records.
In addition to damage charges there are also charges for early termination or return of the vehicle and exceeding the mileage limits.
At the end of the lease you should have the right to purchase the vehicle but the price may be more then the cost of a similar vehicle of the same age.
You will also lose any trade in value because the car is not yours to trade however some dealers may allow you to make trades on your leases for new leases. If this is allowed you should make sure it is in your original agreement.
Purchasing Your New Vehicle
When you decide to purchase a new vehicle you become the owner or at least once you pay off your loan you will be the full owner of your new car. From the day that you roll off the show room lot your car is in your hands to do with what you wish. You can make any legal modifications that you wish and drive as much or as little as you want.
Warranty
If your car is new your manufacturer’s warranty will provide protection for a number of years on different parts of your vehicle. Drive Train or the engine, transmission and differential or transaxle are usually covered for 5 years maybe more for manufacturer defects. This does not mean you can abuse your vehicle and get free repairs. If you sell your vehicle before the end of the manufacturer’s warranty it is often transferable to the next owner which is a good selling point.
Making Repairs
Any repairs or upgrades that you want to make are at your cost unless they are covered by your warranty. You can take your vehicle to any repair business after your warranty runs out but before that time you may be limited to only dealer or authorized repair businesses if the repairs could effect the warranty coverage.
Insurance
Purchasing insurance for your vehicle will be required by your State Motor Vehicle Department as part of your registration to drive the car but because you are the owner of the vehicle you will have more choices on the amount of coverage and company you contract with. This should mean that you can find cheaper coverage as an owner then as a lease holder.
Trade In Value
Because you own your vehicle you have the choice of when to sell it and if you want to trade your vehicle in for a new one. Many people that wish to own a car for only a few years while full warranty coverage is still in effect use their trade in value to pay off their car loan and provide a reduction in the purchase price of a new vehicle.
In some instances you may find selling your car outright will bring more and in this case you will transfer the title to the new owner after making payment of the loan to your bank. Since the Bank will hold your title you will need to settle up with them before the new owner can register the vehicle and drive it.
If your vehicle is paid off then you simply transfer the title to the new owners name at a car title company or your local state DOT office. No fee is charged to the seller.
Final Note
Because there are so many deals that come and go it is always worth your time to ask about all of your options when deciding to purchase or lease a vehicle.
If you are transferred to a town by your business for a predefined time that meets the requirements of a lease then this will reduce the hassle of selling your car if you decide to move.
However for the best overall deals you will most likely find that purchasing a vehicle that is 3 to 5 years old but still under warranty can provide you with the best cost vs benefit. Once a vehicle is over a year old it can lose 30% of its sticker cost depending on the make and its condition.
If you are willing to buy a vehicle that has a few more miles on it and may have a few dings but runs well and has been inspected by a mechanic then buying a used car either from an individual or a re-certified trade in vehicle at a dealer can save you a lot of money.
It also means that once the car is paid off it is yours to do with as you want.