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So let’s say you’re in the market for a new vehicle. Simply put, you have two options. You can buy the car, or lease it. What’s the difference though, and what are the circumstances when you should buy and when should you lease? Here’s what you need to know.
Why or When to Buy
When you buy a car, it is yours, you own it and keep it as long as you wish. However, your monthly loan payments (unless you paid with cash) will most likely be higher than if you were to lease a vehicle since the loan is set up for you to pay off the entire amount of the vehicle.
The majority of people seem to purchase their vehicle, mainly due to the equity factor of owning your own vehicle and the option to customize the vehicle to their liking. There are pros and cons to each option of course.
Why or When to Lease
When you lease a vehicle, it is not yours, and you do not own it. As mentioned above though, your monthly payments will most likely be lower than if you were to purchase the vehicle because you are only paying for the depreciation of the vehicle (plus rent charges, fees and taxes).
Many times, you will see business owners being the ones to lease vehicles. This is because they are sometimes able to write off the expense for business (of course, it depends on the use). Others see leasing as a nice way to own a new vehicle for a few years and then trade it in without any hassle and get another new vehicle to drive. You don’t have to worry about selling or committing to a vehicle for a long period of time.
To better understand leasing a vehicle vs. buying a vehicle, Edmunds.com has a great car cost comparison as well.
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