As both buying and leasing options come with specific trade-offs, therefore always base your decision on your requirements.
Your preferences, taste and lifestyle should influence your choice. To understand clearly if you should buy or lease a used car, ask yourself the following five questions:
What is your Budget?
When you buy a used car, it becomes your asset, as you own it. It entails down payments, registration fees, license costs and taxes. Monthly loan payments are higher than lease pay-outs, as you have to pay for the total worth of the used vehicle with interest and other miscellaneous charges (taxes etc.)
At the end of the leasing contract, you either have to return the car or renew your leasing agreement. If you go for the latter, your cash liquidity will remain protected as you only have to submit a refundable security deposit, sales tax on monthly basis, registration fees, a down payment and the first month’s payment. As said earlier, monthly lease payments are lower than car loan installments, as you only compensate for the depreciation of the used vehicle while utilizing it.
Do you drive a Lot?
If driving constitutes a large part of your daily routine, then buying a used car could be a better choice for you. Feel free to drive to children’s school, your workplace, the grocery store, or meet your friend for a quick coffee. You can drive as many kilometers/miles as you want, however bear in mind that higher mileage will reduce the used vehicle’s resale price.
Car leasing companies usually put a cap on the amount of distance you can cover every month. Most car dealreships offer limited mileage up to 5,000 km. With your own car, you are free to cover as much as distance as you desire. The only expense you have to bear is your fuel cost.
How long do you need the Car?
How long are you in your current country of residence? For instance, if you are in Canada for only a few months, then you may prefer leasing a used car rather than buying new. It will be a cost-friendly and convenient alternative, as you will only be paying for the amount of time you use it.
However, if you are taking up residency for a long time, then you may want to consider buying a new vehicle. According to Cars.com, purchasing a used car is cheaper in the long run than leasing.
Do you Take Good Care of your Car?
Do you tend to get a lot of scratches on your car? With your own car, you don’t have to worry about its wear and tear. It may lower the vehicle’s resale value, but you can always get it fixed before selling it.
Lease schemes come with high wear-tear charges and hold you accountable for it. Depending on the contractual clause, it can go up to three months’ lease payments, says Lending Tree.
Want to Customize your Ride?
Buying a used car also buys you complete freedom to personalize it. If you wish to paint it with a different color or get an extended bumper, you have absolute creative control.
Leasing will restrict car customization, as the company will want to remarket the vehicle in its original condition to another party. You will have to remove any alterations you may have made and possibly have to pay for residual damage.
