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You’ve made the exciting decision to purchase a brand new vehicle. Now that you’re past that, it’s time to decide how you’d like to pay for it. While the differences between buying and leasing can be confusing, especially if this will be your first time purchasing a new car, once you understand the pros and cons, you’ll be able to clearly see which option is right for you.
With the average price of a new vehicle hovering around $33,500, it’s unlikely that you’ll be able to pay for your vehicle all in one lump sum. That then brings up the question of the time period in which you are able to pay off your vehicle.
Most leases are for 3-year (36-month) terms, while the most popular financing term is for 5 years (60 months). A lot can change in three years, but even more can change in five years. While the longer term may result in a lower payment, other factors notwithstanding, you need to decide if you’re comfortable making payments over that long of a time, considering all the life circumstances that could change and potentially make you unable to continue to make payments.
One of the biggest advantages of leasing a car is that it enables you to constantly be in a new car that is covered by the factory warranty. Dealerships like Bay Ridge Nissan tend to love leases because they keep customers coming back on a regular basis, while customers love it because they can quickly get in a brand new car with new technology and safety features. Though perpetual leasing means you’ll always have a car payment, if you are able to make it a part of your normal budget, it just might be worth it to always have the latest and greatest.
A wrong assumption people often make about leasing a vehicle is that you’re actually paying to own the vehicle for the term of the lease. This is incorrect, however, as you’re actually only paying to finance the depreciation of the vehicle that the manufacturer has predicted will occur over the term of the lease. Since you’re financing a value and not the car itself, you don’t ever truly “own” the car, even though you’re the one driving it. With a traditional purchase, you are financing the actual cost of the vehicle, so, slowly but surely, you own “more” of the vehicle as you get closer to paying it off.
Perhaps you’ve heard a gut-wrenching story of someone who bought a brand new car, only to be t-boned the moment they pulled off the dealer lot. With a traditional purchase, your options are fairly limited in this circumstance and will likely result in a fairly steep increase in your insurance rates. With leasing, depending on how the lease is structured, you may have more options on your side.
With the option of gap insurance, you could potentially turn the wrecked vehicle in, walk away, and be free from the responsibility of having to deal with the ramifications of a brand new vehicle that has been wrecked. This extra flexibility is one feature that makes leasing intriguing even for those who are less-experienced drivers.
Ultimately, you know best what your current financial situation is. That makes you the best person to determine which route you should take when purchasing a new vehicle. While there are pros and cons to both options, the ultimate pro is shared by both options: you get to drive home in a brand new car.