When purchasing a used car, a customer is given two options in terms of financing the vehicle. Car dealers give people the option to either lease or buy the vehicle. The outcome for both is the same in the sense that the customer will still get to drive a brand new car. However, buying and leasing in itself are the total opposite of each other. Most people have their own personal reasons as to why they choose to buy or lease.
When you lease a vehicle, you only end up paying a portion of the vehicle’s total cost. That “portion” is the difference between the selling price of the vehicle and the residual value of the car. The residual value is the estimated value of vehicle at the end of term of the lease and is set by the lender. It’s very similar to renting a car but instead you can select a lease term that works for you. The lease term is the number of months that the car will be driven. Lease terms start at 24 months and can go all the way up to 84 months. According to Consumer Reports, there are a variety of up-front costs associated with leasing a vehicle including various fees, security deposit, and a down payment. Most people that choose to lease do it because there is typically a lower monthly payment than buying a vehicle. The longer terms come with a higher interest rate but the money is stretched out over a longer period of time which makes the payments cheaper. A newly leased vehicle typically comes with a full warranty as well as free maintenance during the term. A huge factor when considering leasing is how much driving you are doing. Leasing is definitely not for the person that drives long distances each and every day. This is because there are mileage limits when in a lease. Car dealers give people a limit between 10,000-15,000 miles to drive per year. There are fees associated when going over the mileage limit. Car dealers give customers a chance to finance the balance of the current vehicle, pay for it cash, or lease/buy something new. Leased cars are most always in stable condition because customers are aware that they will be responsible for any excessive wear and tear on the vehicle.
There are definitely more factors to think about when it comes to buying a vehicle. When you buy a vehicle, it is yours as long as you make the monthly payments. People love the freedom of buying because not only do you own the vehicle for life but you can sell or trade in at any given time with out fees. However, a car’s value depreciates at a different rate than the total amout of the loan paid off, this what the car business refers to as an Equity position. A buyer can be in a positive equity position, meaning the amount the vehicle is worth is greater than the amount owed on the loan of a vehicle, or a negative equity position, meaning the amount owed on the vehicle is greater than the vehicle is worth. The best way to get out of negative equiy position is to continue making payments on the loan. It’s important to keep your vehicle in the best possible condition to maximize the selling price. Unlike a lease, there are no rules and regulations when it comes to vehicle mileage. A vehicle with higher mileage has a lower resale price so you may want to think twice about those long distance rides. A new car typically has a factory warranty for the first few years. Once it expires, the owner of the vehicle is responsible for all repair costs.
It really comes down to a person’s financial situation and how much they can and are willing to spend. When you lease, you are always going to have a monthly payment on a car that you don’t even own. The plus side is that you will always be in a new vehicle and won’t have to worry about the costs of maintenance and repairs. When you buy, your monthly payments will be higher but the car will be yours if you plan to pay it off. Most people enjoy having the freedom of owning a vehicle and being able to do what they want with it after it is paid off. Ultimately, it depends on someone’s priorities and their goals financially.
Easterns offers both purchasing and leasing and you can buy or lease with confidence. Easterns Automotive Group has served the Maryland, DC, and Virginia communities for over 30 years and has sold over 100,000 certified used vehicles. Easterns has 5 convenient locations around the DMV area, and every Easterns vehicle has passed a rigorous multi-point certification check so you can buy with confidence. Search our vast inventory of over 1000 cars filled with clean CarFax reports and one owner vehicles. Our friendly customer care staff handles any pre or post sale questions you may have, and that is why Easterns has over a 97% customer approval rating. We invite you to come into an Easterns store, call, or chat online today and experience firsthand what we mean by the Easterns difference! Check out our inventory, see our locations and submit a finance application from home that only takes a few minutes!