When you visit an auto dealership with the goal of acquiring a new car, you may be presented with the options to lease or buy it. Many people in this situation find themselves asking some of the same questions and covering the same issues when choosing to lease or buy a car.
Is it Cheaper to Lease?
Most car dealers will try to convince you that you will save money by leasing rather than buying the car. Dealers like to lease because it lets them make money on a car and then get it back to sell. The least expensive option will depend on several factors including the length of the lease and how much money you put down. If you are looking for short-term costs, the lease will usually be a little cheaper. If you consider long-term costs, buying can save you money.
What is the Difference Between Leasing and Buying?
Whether buying or leasing, you get to take home the car that you want from the dealership. The difference between these two transactions is large, however. With a lease, you essentially pay for the use value of the car for a specified amount of time. When buying the car, you purchase it to use as you please. With both options, the car will depreciate during the first few years, so neither one is a clear cut winner as a better investment.
Should I Negotiate the Payment?
Regardless of whether you buy or lease, avoid the temptation to try to negotiate the payment for your car first. Many people make the mistake of trying to get their monthly payment down to a level they can afford. The dealer can use all kinds of tricks to lower your payment while making more money in the end. Focus on the base price of the car first, and then decide between leasing and buying.
Should I Just Lease and Buy the Car Later if I Like It?
Many drivers use leasing as a type of deferred purchase program. While you are free to buy the car after the lease expires, this is typically not the best decision. When you buy a car that has just been through a lease, you will end up paying much more for it than if you had simply bought it to begin with. You might be better off purchasing another car at the end of the lease to avoid the extra fees and cost involved with purchasing your lease.
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