Once available primarily for luxury vehicles, leasing is now available for a variety of vehicles, making it an attractive option for those who want to experience the benefits of having a new car for lower monthly payments. Before you sign on the dotted line, it's important to understand how a lease works, as well as the advantages and disadvantages of leasing versus buying.
When you buy a car, you agree to pay for the price of the vehicle, plus interest, taxes, and fees. In contrast, with a lease, you pay only for the depreciation of the car during the lease term, interest, taxes, and fees. Deciding whether to lease or buy really depends on your needs, finances, and comfort level. In general, leasing is usually an attractive option for people who like to drive new cars, put average or below average mileage on their cars each year, and don't have down payment funds or a car to trade in.
Leasing offers appealing benefits too. You'll have lower monthly payments, the ability to drive a new car with features that you might not have been able to afford otherwise, fewer upfront and repair costs, and the opportunity to get a newer car in a few years when your lease term expires.
Although leasing has a lot of great benefits, it does have it's drawbacks too. For example, when you lease, you don't own the car at the end of the lease term, though you will have the option to purchase it at that point. Because of this, you'll continue to have monthly payments whether you decide to lease a new car or purchase the vehicle. Leasing also comes with mileage limitations. Most lease terms come with 12,000 miles per year. If you exceed this amount, you will pay a fee per mile, which can be costly. Also, in the end, leasing a car will have higher costs than if you were to purchase that same car.
Leasing can be an attractive alternative to buying, but buying has its benefits too. When you buy, you have an asset at the end of your loan term that you can use to trade in. You'll eventually have no more car payments and you have no mileage limit or restrictions on making changes to the car.
If you decide to buy, check out Sikorsky Credit Union's auto loan
options. Our CT credit union auto loans feature various terms with great rates on both new and used cars.
In short, there are benefits to both leasing and buying. Make sure you understand and weigh all your options and drive away with the best choice for you.
It's no secret that shopping for a car involves making many choices like color, style, features, and accessories. However, there's another decision to make that you might not have thought of, lease or buy?