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Leasing versus buying versus…homeownership?
Car buying and leasing has truly turned a corner. With new ways to purchase cars and creative lease busting and other car ownership methods being introduced, there always seems to be some new crazy story or method.
The latest is a story out of Connecticut is the provision of a Range Rover lease with the purchase of a particular home. The home in New Canaan, Connecticut is a $2.9 million dollar estate resting on two acres. If you’re able to close on the property by December 25th of this year, the property comes with a three-year lease on a 2019 Range Rover. The lease sounds like a fantastic bonus on a home purchase, but leases do come with their drawbacks and it’s possible the home buyer could end up owing the dealership a lot of money when they turn the Range Rover back in at the end of the lease.
Car buying and leasing has truly turned a corner.
The age-old debate of whether leasing or buying is better is dependent on the circumstance of the individual. If you are in a temporary location, your financial circumstances are going to vastly improve in the next couple years, or you are already financially well off and like to drive new cars, a lease is better for you.The cost of a lease and ownership generally equal out to about the same, it’s just the payments and timing are structured differently, which can benefit those who need or want to make lower monthly payments. Generally, there will be cash due at lease signing, but the monthly payments will be about a third lower than the payments if you were to purchase the car.
Once the lease is completed, there may be fees for extra miles driven; scratches, dings and other wear and tear; or damage to the vehicle. In the end, these figures can end up being quite costly. Once the car is returned, you receive no cash back. You have no equity in the car and will need additional funds to get yourself into another lease or purchase. So this can be a large amount of funding needed at one time.
The age-old debate of whether leasing or buying is better is dependent on the circumstance of the individual.
Depending on the time of year and buyer incentives, a downpayment of sorts will be required. The car purchased, and your credit situation will greatly influence how large or small your downpayment will be.
In addition to the downpayment, a higher monthly payment will need to be made in order to purchase the car. You can lower the payments but this would be done by increasing the amount of your downpayment tor having a quality trade-in.
Instead of a perhaps three-year lease, you’d be looking at anywhere from five to seven years of monthly payments for ownership. But in the end, you own the car, and there should be some remaining equity in the car even if you have driven many miles. Even if the car is not in good enough shape to be your primary vehicle, you could still keep it as a second car or sell it independently for the highest resale value. These funds could then be used to purchase a new vehicle.
The car purchased and your credit situaiton will greatly influence how large or small your downpayment will be.
If the car is still in decent shape, you now have all that money free from monthly payments to use towards maintenance and saving for the downpayment or outright purchase of a new or newer car.
Overall, both leasing and buying have their pitfalls. What is going to be best for you will depend on your current financial situation, your likely future financial situation and your driving needs. A driver who travels many miles is not best suited for a lease. A driver who likes to drive the most current of cars is likely not going to be happy purchasing a car.
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