When it is time to get a new vehicle, a consumer is faced with the option of either purchasing or leasing one. For many people, leasing each of their vehicles is a way of life. There are many pros and cons to this approach, however.
The Perks of Leasing a Vehicle
If you choose to lease your next SUV, then you will most likely have a lower down payment and lower monthly payments. You will also be able to drive a new model and you will not have to worry about owning it for long enough for it to become outdated. This is an especially important consideration for those who like to maintain a certain appearance.
Most leases only last two or three years, and this provides status seekers with the ability to constantly drive newer vehicles, which for many is appealing. Another perk of leasing a car is that you will not have to worry about haggling with anyone when it is time to sell it or worry about depreciation value. As long as you keep it well maintained, you will be able to simply turn it in at the end of your lease period.
The Negative Aspects of Leasing a Vehicle
Leasing an SUV is just like leasing an apartment, and you will not accrue any equity. There will never be a time when your vehicle is paid off, and you will not have an asset that you can sell down the line. You will also need to be very cognizant of both the regular maintenance of the vehicle and the amount of miles that you drive.
Lease contracts are structured very rigidly, and any mileage overages or damage to the vehicle will end up costing you a lot of money. The other issue with a lease is that there is little to no flexibility. If you decide you want a new vehicle six months early, for example, there will most likely be an extremely large penalty that could equal as much as six months’ worth of payments.
Which Option Makes More Financial Sense?
The financial aspects of leasing versus buying are not as cut and dry, as most people would expect. A leasing calculator is a good place to start, but you also need to carefully consider your particular life situation.
For example, if you only have the ability to come up with a $1,000 to start the process, then leasing might be your only viable option. Leasing also generally comes with a smaller monthly payment, and this makes it an attractive option for those who are working with a small budget.
If you drive a lot, however, or if you are unsure about your job stability, then leasing is not a very good idea. When you purchase a vehicle outright, there are no limitations on how much you can drive. You will also have the ability to sell your vehicle if you have any major life changes.
Making a Decision
Unfortunately, there is no one size fits all option when it comes to leasing versus buying. Each person needs to carefully consider their needs and their finances before they decide what to do. You can save money up front with leasing, but your monthly payments will never end.
Buying an SUV requires more money up front, but you will eventually reach a point where the vehicle is paid off. Weighing these two factors along with all of the other important variables and deciding what matters the most to you is the only way to make an informed decision.
Leasing has long been a viable option for commercial enterprises, with later adoption in the consumer space. Whether looking for tractors for sale or combines for lease, the financial considerations are often the same in terms of capital investment, usage and residual values. Whether for personal or commercial reasons, consumers should consider all financial options to make the best financial decision possible.