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  Lease or buy?  Car leasing versus car buying explained  
 
     
 

I think it's safe to say that we've all known at least one person who has made an "on a whim" vehicle purchase or lease, only to find that they are miserable with their decision. On the flip side, there are people who have purchased or leased a vehicle and are very happy with their decision. There must be something in the decision making process that determines if your car buying or leasing experience is a good or bad one. But what is it?

Knowledge. Pure, simple, honest knowledge! If you are thinking about obtaining another vehicle, or just toying with the idea, and want to know whether you should buy or lease, this article is for you. Don't be left in misery later!

When deciding whether to lease or buy, determine what your current situation is. Are you looking for a long-term vehicle or to test a vehicle before deciding whether or not to purchase it? Do you find yourself getting tired of your vehicle and wanting to upgrade after a year or so? Or do you prefer keeping your vehicle for several years before thinking about getting a new one? It is important to understand why you are looking for a new vehicle and what your vehicle trends are before making your decision.

You also need to gather all the facts needed to make an informed decision. Both options have their ups and downs. Depending upon your situation, either might be right for you. Before you make your decision, make sure that you have all the facts so you don't end up in regret. Here are a few things to consider.

When you purchase a vehicle, you agree to buy the vehicle you choose. This usually involves a large down payment and complete financing responsibility for the total cost of the vehicle. You become responsible for the maintenance and upkeep of the vehicle. And if something goes wrong, unless you have a warranty and only under certain circumstances, you are responsible for any needed repairs. If you decide you no longer want the vehicle, you are responsible for selling it so you can buy another. But you can sell any time you want, without any pre-set conditions. And if you suddenly decide you want to paint rainbows and smiley faces all over your vehicle, you at liberty to do so.

When you lease a vehicle, you simply agree to test out the vehicle for a specified period of time to see if you like it. Leasing requires a down payment, but this amount is generally smaller than if you were buying a vehicle. And your payment is based on a lease rate, not on a loan rate. This means that it may cost you only $250 a month to lease a vehicle and $362 a month to buy the same vehicle. At the end of the specified testing period, you have the option on purchasing the vehicle for the current value or giving it back to the dealership and making a new decision. If anything goes wrong with the vehicle during the lease period, you may be able to get the dealership to take care of the issue with very little to no money out of your pocket, depending upon your lease contract. But that's not where the cookie crumbs stop! There are also drawbacks to leasing a vehicle. If you decide you no longer like your vehicle, you have to wait until the lease period is up before choosing another, otherwise you may be found to be in default of your lease agreement. This will end with a negative report on your credit. You are also bound to a maximum number of miles during the duration of your lease. If you go over the maximum number of miles, you are penalized with a cost per mile over the maximum. This is generally around $0.10 per mile. This amount may sound like a minor inconvenience, unless of course you have children who are all in sports and require that you shuttle them around all week from one end of town to the other and a family that enjoys taking road trips and vacations. Then that $0.10 per mile may seem like an extraordinary burden.

Either one of these decisions may be right for you, depending upon your situation. To ensure you end up happy in the long run, gather all of the facts first. Make sure that you do your research.

If you decide to lease, know that not all leases are the same. Some carry stiffer penalties, while others carry lighter penalties with the demand for a larger down payment. Make sure that you review the lease contract before signing it. If you find anything that you aren't comfortable with, ask the dealer to explain it to you in full and if needed, ask to think about it overnight. Any reputable dealer should happy agree to allow you the time you need to make the right decision for you. If the dealer refuses or tries to persuade you otherwise, you may want to consider another dealer.

If you decide to buy, make sure that you research the vehicle you are about to buy. What type of resale value does this vehicle have and how does it compare to other similar vehicles? How does the vehicle perform? Have other owners experienced problems? Have their been any recalls? What is the safety rating? These are all things you will want to know going into the sale. All of this information can be obtained by doing a search on-line. Www.Edmunds.com and www.ConsumerReport.org are two very good sites. You can also do an Internet search for "compare cars".

Whether you decide to purchase or lease, know what you are getting into before you finalize the deal. This will help you feel at ease about the decision you have just made and will increase the chance that you will still be happy with your decision later.