BY JELANI DANIEL
A lease and a loan come with different perks and downsides. By looking at both, you can decide which suits your financial situation and lifestyle costs both currently and in the long run. Since both options can be costly, the long term decision should be researched in depth before considering one or the other.
In short, a lease may cost less on a month-to-month basis but come with more restrictions and a longer series of monthly payments. On the other hand, purchasing may cost more initially but result in no monthly payments over time. A lease can be compared to renting a home while financing or buying a car can be compared to buying a home; one has more extras included, but one adds to your assets column.
LEASING:
Leasing is a very common option for those who cannot afford a hefty initial down payment, but have a good credit score. While financing is a great option, a lease can give you the satisfaction of driving with a warranty, lowering costs for repairs. As well, you can upgrade your vehicle to a more reliable model over time rather than using the same model for years on end.
THE CONS OF A LEASE:
Monthly payments for a lease are affordable, but limits regarding the amount of kilometers may come into play. You have less freedom in terms of monthly payments since they continue for years on end until you stop leasing. Ending a lease may also cost you extra, adding to the cost.
PURCHASING:
When you buy a vehicle, you may have to get an initial loan to pay back the amount that your vehicle costs, but in the end, you have a vehicle that is your own. The quicker you pay back the loan, the quicker you have your own car without monthly payments.
THE CONS OF BUYING:
Buying may cost you more in the long run if you have to pay back a third party. Considering the difference between a short-term and a long-term loan option may be important since shorter loans may cost you more but help you reach your financial goals quicker and a long term loan may stretch out payments but be cheaper overall.
In short, you can compare leasing to renting a house, and purchasing to taking out a mortgage on a home. While one has a series of benefits and afforded, the other adds to your asset column.
