Should You Buy or Lease Your Next Family Car?

If you’re thinking of getting rid of your old family car, then you’ll be puzzling over which new one you’ll choose to buy to replace it. Of course, you’ll be focusing on what optional extras it comes with, and how much space it will give you, but there are other considerations you need to think about as well. How will you finance your new car? Will you save up and buy it outright, take out a car loan or trade in your old one for a discount? There is also another option – leasing – so you need to decide if it will be cheaper to buy or lease your next car.

Car Loans or Leasing Agreements

If you’re looking for a new car, you’ll almost certainly be looking to have a car loan to pay for it. It could be with the bank, with the garage where you bought it or on finance. There are some advantages to taking out a loan compared to leasing. With a car loan, if you needed to you can save money down the road by using the option of refinancing your car loan, and this will also increase your options when it comes to choosing the car. It could make your payments smaller and save in the interest.

How Long Will You Keep Your Car?

When you enter into a leasing contract for your car, you know that every three years or so you can hand it back and least a new one. It can be a big selling point and one that many people like. However, if you buy your new car, and it’s a reliable make, there is no reason why it cannot run for many years with no problems at all. You also know that if it were to be scratched, that this wouldn’t be penalized in your lease agreement.

Do You Make a Lot of Trips in Your Car?

One reason that some people prefer to buy rather than lease is the mileage restrictions. To cover the cost of a car's depreciation, lease companies will charge you more if you travel over 10,000 miles or so a year. That means that you could find yourself paying more if you do a lot of traveling. If you buy your new car, there is no restriction on your mileage, so you can make all the trips you need to make without having to worry.

Depreciation

With a leased car, you wouldn’t need to worry about depreciation as you would never need to sell the car. However, you won’t be able to sell it when you’re done with it. Depending on the type of car you buy, it’s a common fact that you lose a lot of value of the car as soon as you drive it out of the showroom. It means that you’d lose money even if you sold it the next day, but the little you do make could be hand for buying your next car after that.

When you consider the pros and cons of buying a car against leasing, they are fairly matched. It all depends on your circumstances and the way you use your vehicles.