To Lease or Buy A Car – That Is the Question

To Lease or Buy A Car – That Is the Question
  • Opening Intro -

    Every large purchase of any type should really be thought through and mulled over before proceeding.

    But that begs the question: How do I do research for these big purchases?


Well in order to answer this question we dive into one of the biggest questions that people have: Should I lease, or should I buy a new car? This information can all be found online through respectable sources.

Leasing Basics

When you agree to lease a vehicle, you’re actually renting it from your dealer. At the end of the lease, you can either give the vehicle back to the dealer or buy it at the price that’s in the lease contract. This is hardly the same as buying a car. When you buy a car, you’re the owner once the loan is paid off.

Monthly lease payments are usually lower. Car loan payments are based on what the price of the car is, how long it will take to pay the loan off, and what the interest rate is. Lease payments are a bit different. The amount of the lease payment depends on several things:

  • The Sales Price.
  • The "Residual Value"
  • The "Rental Charge"
  • Taxes and Fees

The sales price is just like buying a car. You haggle over the price with the dealer.

The "Residual Value" is what the vehicle will be worth at the end of the lease. You need to consider depreciation. The "Residual Value" is the amount you will pay to buy the vehicle after you have made all the lease payments.

Think of the "Rental Charge" as the interest rate.

The "Taxes and Fees" have an effect on your monthly payments.

The Down Payment:

Some dealers require a down payment for a lease. Naturally, the more you plunk down, the lower the monthly lease will be. That said, it may not be reasonable to make a huge down payment on a car that you’ll probably give back to the dealer. Consider going for a bad credit car loan in Australia as they can help you with a down payment that will help you get on the road in no time.

Leasing Has A Big Drawback:

When you lease a vehicle, you don’t get any equity in it. This is similar to renting an apartment. Once your lease is up, you don’t own the apartment. By the same token, you don’t own the vehicle once that lease it up either.

other valuable tips:

Leasing Has Its Advantages Too!

Just because there is drawback in some aspects of leasing doesn’t mean that its not going to work for you. Consider the following:

  • Leasing means lower monthly payments.
  • You can turn the car in after the lease is paid and get another one.
  • The new car warranty means that your repairs are probably covered for the period of the lease.
  • There are no resale concerns when you lease a vehicle.

Doing your homework on this subject can really help you land a great deal.

What Should You Do? Should You Lease or Buy?

It’s up to you. What kind of buyer are you? This article has given you some things to think about. At least now you have some more things to consider when you make that decision. Now you won’t be going into the dealership uninformed!

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Consumer Tips reference:

GUIDE: auto loan guide


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