New Car Pros and Cons — Buy or Lease?
New York Honda Dealer | Car Dealerships in Hempstead
A big decision when buying a new car is whether to buy or lease. There are pros and cons to either decision, based on the car that interests you, your age, income, and other factors. Let’s review the pros and cons of buying versus leasing a new car.
Buying — When you buy a new car, it is yours rather than the dealership’s car. There are no mileage limits or restrictions on when you can sell it or modify it to suit your tastes. However, unless you come up with a hefty down payment, you will have a large monthly payment to cover the principal and interest of your car loan. You can take a longer payout loan but then you might end up owing more than the car is worth later on (called being upside down on the loan) which can make it difficult to sell if you aren’t happy with the car.
Leasing — When you lease a new car you are paying the depreciation that is expected for that make and model over the terms of the lease. The monthly cost of a lease is usually much less than a financed cost, so people will often lease a more expensive car they desire knowing that they can afford a lease payment but couldn’t afford to buy that car. You will be required to return the car in good condition at the end of the lease.
Buying — Unless you have a lot of cash lying around, it is better to finance your new car as long as interest rates are relatively low. You are using someone else’s money for the life of the loan, and your money can stay in your pocket or bank account. Finance rates on new cars are usually lower than pre-owned because the new car has a higher value and has not been depreciated yet. And, once you pay off the loan the car becomes an asset you can sell or trade for another.
Leasing — Financing is embedded in the lease rate, and you can ask a dealer to tell you what the underlying interest rate is being used for the lease cost. Most people accept the lease rate for a car they want because it will be less than the monthly cost of financing, as noted above. People who own businesses will often lease because part of the lease cost can be used as a business expense.
Owning the Car You Want
Buying — Depending on your budget, you may need to make some compromises in the car model trim or additional features you have dreamed about, because those features may result in a monthly finance payment above your means. However, since you own the car, some of those upgrades may be available in the aftermarket and you can modify the car to suit with no restrictions.
Leasing — Once you figure out a leasing budget, you may find you can afford a more expensive car with additional goodies because the lease cost will typically be lower than buying it. You may also find that after the lease period you can afford this more expensive car by buying out the lease and converting it to a purchase loan.
Mileage and Maintenance
Buying — Drive the car as much as you wish, because ownership comes with no mileage restrictions. You also can perform as much or little maintenance as you wish, with the understanding that routine maintenance will help keep the value of the car higher.
Leasing — You are required to follow all manufacturer maintenance guidelines and requirements because you don’t own the car. You could face expensive fees at the end of the lease for failing to do routine maintenance. You are also required to drive less than a specified number of miles or face additional fees for excess mileage.
Whether your choice is to buy or lease, your decision about where to go is easy — Millennium Honda in Hempstead. We have an extensive inventory of new Hondas for buying or leasing, and also a great choice of quality pre-owned vehicles if you prefer. Come to Millennium Honda and we will give you the best value for your money.