You have probably heard mixed reviews on the issue of leasing a car versus buying. There are plenty of people who will tell you buying a car is the worst “investment” you can make; while others say leasing a car is wasting money on an item that could be an asset. So, is leasing ever a good option?
Is It the Right Choice?
The short answer is, yes. Leasing can be a good option for many people and does provide some advantages over buying a car. Buying a car can be expensive and, often, requires a down payment at the time the car is purchased. Most car purchases also include additional fees for taxes, the car title and license. These fees can add up and may not be able to be rolled into the loan. Getting approved for a car loan can require a much higher credit score than when applying for a car lease. The lender may also have more freedom in increasing the interest rate on a car loan when it is being purchased by someone with less than excellent credit.
Your current amount of debt can influence the likelihood you get approved for a car loan, and car leasing companies may be more forgiving when it comes to your debt and credit standing. Leasing can be a better option for someone who may have recently completed bankruptcy, as lenders may refuse to provide credit to a borrower right after bankruptcy. If you have experienced a repossession, debt settlement or elimination through bankruptcy, leasing may be a good way to begin rebuilding your credit. If you can demonstrate consistent and timely payments, your credit will improve and you may be able to obtain a car loan to purchase a car in the near future.
When you purchase a car, the warranty expires after a specified term; whereas leased vehicles have contract terms that usually end before the warranty expires. For those who have poor credit, less cash to put towards a down payment, or don’t want to be without a warranty; leasing can be a good option when shopping for a car.