The Lease vs. Buy Decision

The decision to buy or lease an automobile can be a difficult one for many consumers.  There are several resources available to car shoppers who need to find out whether it is better to buy or lease new vehicles.


Seeking Car Loans With Good Rates

There are two schools of thought for consumers interested in financing a new vehicle purchase or lease.  Many consumers opt for outside financing to avoid heavy sales pitches from car dealers and find better rates.  Companies like CarDirect have loan calculators that help consumers determine the loan size appropriate for particular budgets.  This online service differentiates between leased and purchased cars to show that each transaction type comes with a distinct price tag.

It is possible to get financing for a purchase or lease through the car dealership the day of the transaction.  Companies like Toyota have financial services departments that pre-approve consumers and offer special programs for people with bad credit or insignificant credit histories.  These programs are ideal for drivers who want to find financing deals for purchases and leases, while cutting down on paper work required by outside lenders.


Researching Credit Reports Before Heading To The Dealership

Every consumer who is thinking about buying or leasing a vehicle needs to look at an updated copy of his or her credit report.  This report will be used by dealerships and financing companies to determine interest rates, payment amounts, and minimum deposits.  The Federal Trade Commission has worked with major reporting agencies through AnnualCreditReport.com to offer free credit file information once per year.

The average score on these reports may help consumers make their decisions between buying and leasing vehicles.  An unfavorable rate may lead to a prohibitively high financing agreement for the purchase of a new vehicle.  One of the main attractions of leasing a vehicle is that the monthly payments are lower, and the financial commitment is less significant over the term of the agreement.


Tracking The Value Of Vehicles

Most consumers know the old adage that a car loses a significant portion of its value as soon as it leaves the dealership.  This adage does not apply evenly across different automakers, models, and makes.  A good way for consumers to choose between leases and purchases on vehicles is understanding the resale value on their favorite cars.

The standard tool for tracking car values over time is the Kelley Blue Book.  This online tool allows drivers to look at the recommended resale price of their vehicles between the original release date and the present.  A well-informed shopper may recognize that a new convertible may suffer greatly from age compared to a reliable SUV.  This shopper can choose between leasing the convertible to cut down on disappointing sales years in the future and buying from a car manufacturer with a good history of high resale values.


Choosing Purchases And Leases Based On Manufacturer Discounts

One of the deciding factors between purchasing and leasing a new vehicle is the manufacturer discounts provided for each type of transaction.  Car companies like Subaru utilize special rebates, reduced interest rates, and cash-back offers to attract customers.  These attractive offers are separated between purchase and lease agreements, depending on the company’s desire to get older models off the lot or to promote a limited run of new vehicles.

There are several common tools used by car companies to funnel consumers to purchase and lease agreements.  Some companies run promotions using zero interest on financing agreements for a certain number of months to decrease the financial burden on new buyers.  Other companies offer cash back and rebates which can be applied to the initial cost of the vehicle before financing agreements are implemented.  There are other benefits including reduced monthly payments on leases and upgrades to options packages that can help consumers choose the right transaction type.


Upgrading Vehicles Through Leases

The purchase of a family sedan, minivan, or truck can be difficult for families with limited funds.  One of the advantages of leasing a new vehicle is upgrading to a vehicle that would be out of a family’s price range through purchasing agreements.  Parents can choose minivans and SUVs with space for kids and supplies without committing to at least a decade with an expensive car.

Individuals without children can also upgrade from older vehicles with the help of auto leases.  An older driver who wants a luxurious car to replace a more practical sedan can lease a convertible sports car without the high monthly payments of a purchase.  It is important for individuals leasing luxury and sports cars to adhere to mileage limits set by the car company to avoid payments after the lease is complete.

Corporations can benefit greatly from leasing vehicles instead of investing in purchased trucks, cars, and utility vehicles.  A company that wants to keep its fleet filled with new cars can work with a local dealership on a fleet lease agreement.  It is important for companies leasing fleet vehicles to stagger their contracts to avoid keeping large portions of their fleet out of commission at the end of contracts.




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