Car ownership rates in New York City have always been low comparing to other US metros. Many New Yorkers use public transportation and rent a car when a private vehicle is needed. But in recent years, less Americans are buying cars even in other cities. According to recent statistics, young Americans are less interested in owning cars comparing to previous generations, while the latter prefer to lease a car instead of buying one.
Is it financially wiser to lease a car instead of buying a car, or is it the other way around? Here are some cons and pros of renting and buying a car.
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Pros of Renting a Car
– Lower monthly payments – the monthly payments of a leased car are used to cover its depreciation, so they are usually lower than the auto loans payments. In addition, the down-payment is usually close to the nothing (if not nothing at all) and the tax payment and maintenance costs are significantly lower. So if your cash flow and savings are limited, leasing a car would probably make more sense financially.
– Luxury cars lease deals – thanks to the low payments, you can lease a car that normally you could not afford to buy. So, if you want to drive a luxury car such as BMW or a Mercedes-Benz, you can probably find a decent lease deal that fits your budget.
– Less headache – when you are leasing a car, the car’s depreciation and the procedure of selling the car and buying an alternative car are the dealer’s problem – not yours. Once you are done with the car, you simply hand the keys to the dealer and get a newer model.
But is it really that simple? Read about the downsides of car leasing.
Cons of Renting a Car
Additional fees – lease agreements can include additional charges (or penalties) for extra mileage fees and tear-and-wear, which increase the total lease payment significantly. Then, leasing might be unworthy if you plan to drive extra-long mileage and tend to ruin cars (of course, these factors can impact the car’s value when attempting to sell an owned car). There are also additional fees for replacing the old car with a new one and for getting out of the contract before the agreed time.
High insurance – insurance rates tend to be higher on leased cars.
Lease is not ownership – eventually, the leased car is not yours, and you cannot sell it or pass it to someone else.
The bottom line, the decision whether to buy a car or lease one depends on individual factors such as the available funds and monthly cash flows, the driving needs, short and long-time plans.