Understanding the concept of buying is simpler than leasing. When you buy a car, you know one day you will own it. You also have the right to sell the car whenever you want. Leasing, while it is a bit like renting but there are differences. You own a car only for the term, which can be around five years. There is also a limit on the miles you can run before the lease expires. Yet, you don’t really own anything in the long term.
In case of leasing, monthly payments are smaller and you don’t pay taxes on the cost of the whole car. Leasing comes with some monetary benefits but there are also other benefits that a calculator may not be able to calculate. Same goes for buying. Let’s take a look.
When you buy a car, you will have to pay the full cost of the car including down payments, taxes and interest on the loan. It does not cover depreciation and that is why it may be the best option for those who wish to keep the car for many years to come. The benefits involved with buying are more emotional than financial. And that is something calculators can’t calculate.
That doesn’t mean buying has no financial benefits. Speaking of long term, you will one day be free of all car payments. Also, the insurance limits are much lower when compared to insurance limits on leased cars.
If major financial benefit is concerned, leasing may be an option even a calculator will agree with. Leasing does not involve a down payment. Taxes only cover the amount of total payments you will make rather than the full value of the car you lease. Unlike a buyer, you won’t have to absorb the full depreciation cost. Leasing is a good option for businesses as they can get major tax benefits. The only drawback here is the mileage restriction.
So it’s all boils down to personal preferences as well as your current financial situation. In any case, a calculator to analyze your prospects in both cases can be greatly helpful. And such a calculator can be found on our website.