You are shopping for a new car and like many other van buyers out there you are faced with many decisions. But one really important one is deciding between leasing and buying, after all that determines how you are going to pay for it. If you bought your van straight out you may need a loan that requires $700 a month, whereas with leasing you could slash your monthly payments in half.
Although that may sound nice, there are still people who justify spending more to lease a better vehicle sounds nice, it still something to mull over.
In order to decide whether leasing is a good idea, let’s look at the more finite points between buying and leasing a van.
The Inner Workings Of A Lease
Buying a car outright means you’ll be paying for complete ownership. That may be great, however you will be charged the full market price for the vehicle, in this case a van. If the van costs $35,000, you’ll either need to pay it in full right there or you will have to take out a loan of that amount. That opens up a whole other can of worms as you may have to make a downpayment initially plus you may be charged interest while you are making those loan payments.
In terms of a lease, you may still end up borrowing money, however the amount is actually based on the amount of the car that depreciates over the length of the lease. For example if you lease the van for three years and the wear and tear of the vehicle will make it be worth $20,000, then you’ll only need to finance the difference. That $20,000 is the residual value and you’ll only need to pay the difference between the van’s full market value ($35,000 in this example) and the residual value of $20,000.
In this respect, although you aren’t owning the vehicle as you’ll have to give it back after three years, you still save a lot of money in the end.
Not only that but you also have an upgrade factor with leases. In a lot of cases the leases given last two to four years. During those ages those are the prime of a cars life so if you are buying new, you don’t have to run into a lot of problems. Furthermore even with leases the vehicles are covered fully by warranties as well.
The other thing to consider as well is leasing is a good idea if you are more accident prone. In many situations actually buying a vehicle outright is a money saver long-term. That is if you are both a good driver and you plan to keep the car around after you pay off the entire loan. Not only that but you also resist the urge to upgrade constantly.
If you struggle to keep up with repairs, get into accidents, or can’t stop upgrading, leasing can be a better option since those three things do rack up expenses over time. When it comes to leasing there is still that upgrading for a newer model of the same car. This mitigates you from repairing a vehicle constantly.
The Trade Off
In the long-term, you will end up paying more when you are leasing, but in return you will be paying significantly less each month along with very little worries about repairs and overall reliability of the van’s performance.