When you want a new vehicle, one of the most fundamental decisions you'll need to make is whether to lease or buy. Leasing does come with some benefits, including lower upfront costs, but most drivers will find that it's wiser to take out a car loan in order to make the vehicle theirs outright.
Here are just four reasons why.
1. You're Making an Investment
Probably the most compelling reason to buy a car instead of leasing one is that your payments will go towards making the vehicle your own. Though monthly payments will typically be a little higher than they would with leasing, you will actually own the vehicle when the last payment has been made. This allows you to build equity, so you can then sell the car and receive a large sum of cash to put toward your next vehicle. Alternatively, you can keep driving the vehicle for years to come without having to make any monthly payments at all.
2. You Can Sell Whenever You Want
When you lease a vehicle, you sign up for a fixed term. If you want to return it before that term ends, you'll probably face a relatively high fee, and it isn't always possible to keep a car after a lease term expires if you have become attached to it. Things are different when you buy. You can sell the vehicle whenever you want—you can even sell before all the payments are made and have the loan you used transferred to the new owner.
3. No Mileage Restrictions
One thing people often fail to appreciate when they lease a vehicle is that they won't be able to drive as much as they want. Lease agreements come with mileage limits. If you exceed that limit, you'll be charged a fee depending on how many more miles you drive. This can feel extremely restrictive, and it's less than ideal if you tend to drive a lot or make frequent long journeys. In contrast, owning a vehicle means being able to drive it as much or as little as you want.
4. Option to Modify
Lease agreements don't just place restrictions on mileage—you'll also be unable to make almost any adjustment to the vehicle. This won't be a major issue for many drivers, but plenty of people like to modify everything from how their car looks to how well it performs across different terrain. If you're one of those drivers, it makes sense to buy rather than lease.
For more information about car loans, contact a local lender.