Buying vs. Leasing - Which is better for you?

With the average cost of a new vehicle rising each year, it is becoming more important to understand the options available for financing. Leasing has become a much more widespread option available to consumers through a number of different sources including independent leasing, automobile manufacturers, local dealerships and financial institutions. Utilize with a Utilimaster

Leasing is not for everyone, and your decision should take into consideration several factors. They include how long you would like to keep your vehicle(s), how many kilometers you typically drive your vehicle each year, how much money you want to make available for an initial payment, and how you value ownership or equity of your vehicle(s).

When you lease, you pay only for what you use of the vehicle. The most frequently cited advantages of leasing are that leasing requires a lower initial cash outlay, the monthly payments are generally lower than a loan, and you can usually get more vehicle for your money.

When you buy your vehicle, either with cash outright or with a financial agreement, is that you have or are building equity toward ownership. The main advantage is that you own the vehicle after all the payments are made. The main disadvantage is that by the time you actually own the vehicle, it may have cost you far more than the vehicle is worth.

So... you have decided you would like a new vehicle. Should you obtain a loan, lease, or pay cash? There are pros and cons for all three methods. Consider the following when determining what will best suit you and/or your companys' needs and requirements: Luxury Vehicles

PAYING IN CASH
Only about 10% of all automobile purchases are in cash. If you pay for the entire cost of your car with cash up front, it's all yours and you don't owe anyone anything. However, you won't have that money available for investing, for other uses or in case of an emergency.
INITIAL COSTS
Leasing almost always has one very powerful advantage over a loan... lower initial cash outlay. With leasing there is normally little to no initial cash required in order to put yourself "in the vehicle".
EQUITY AND OWNERSHIP
When you lease, at the end of the lease, you have no ownership of the vehicle. When you finance your vehicle with a loan, you are gradually building equity as you pay it off. However, you should consider the amount of money that you will have to spend over the total period of the loan in order to build equity. Even though you will "own" the vehicle after making all the loan payments, in all likelihood the value of your vehicle will be worth much less than the amount that was spent in order to obtain it. And even though an asset... it is a continually depreciating one, losing more and more of its value with each passing day.
SALES TAX
When buying a vehicle with a loan or cash, sales tax must be paid in full on the entire value of the vehicle at the time of purchase. With leasing, this permits the taxes to be fixed on each monthly payment rather than on the entire value of the vehicle. The rationale behind this is to tax you only as you consume the vehicle's value.
PURCHASE / WALK-AWAY OPTION
When you lease a vehicle, you have many different options as to what you would like to do with the vehicle, your lease agreement can include the option to purchase your vehicle at the end of the lease. Or as long as all of your obligations are met as to the lease agreement, such as mileage, condition and payment agreements, you may be able to simply turn in the vehicle and walk away.
BETTER EQUIPPED VEHICLE
Because of the way leases are structured, the payments will more than likely be lower than loan payments. That way you can generally add more options or equipment, even upgrade to a more expensive model than you could afford with a loan.
UPGRADING
Also consider how often you want to drive a new vehicle. Leases can have shorter terms than a loan, so you can drive a new vehicle every two to three years.