Looking for a car can be exciting, especially if you enter the showroom with a plan. Whether you have decided to lease or purchase, you are confident in the research and know what type of car you want and how you intend to finance and insure the vehicle. Let’s look at the basics of leasing vs. buying and the impact these choices will have on your car insurance.
Leasing Points to Ponder
When you lease a brand new car, the lease period is usually 3 years. This means you’re always driving a newer model vehicle. Many leases include free scheduled maintenance, which covers things like oil changes and tire rotations. Being new, the car should not experience any major mechanical issues for you to worry about, which means no additional repair expenses. Lease payments are lower than if you purchased a vehicle outright, and you may be able to afford a higher priced vehicle than you would be able to purchase. At the end of the lease period, you simply bring the car back and turn in the keys. If you prefer to always drive a newer car, leasing is your best bet.
The downside to leasing is that it may include paying mileage penalties if you exceed the allowable annual mileage provision. If you end up damaging your car beyond what the manufacturer covers, you may also incur charges for excessive wear and tear. If you want to turn in the lease sooner than its term you need to make the remaining payments. If you decide to switch brands at the end of the lease, you may have to pay a fee.
Considerations for Buying a Vehicle
Purchasing a car allows for the owner to customize a new vehicle. There are no mileage restrictions on a vehicle you own. Longer-term financing plans are available to qualified buyers, which reduces the monthly payments on vehicles, but they can still be higher than if you leased. The good news is that you may trade in or sell your car at any time, free from penalty. At the end of your financed payments, you own the vehicle and have accrued equity that you can apply to the purchase of your next car.
