When it comes to purchasing or leasing a vehicle, there are advantages to both. Here at Plaza Cadillac we want to help you make the correct decision when it comes to your new vehicle. Below are some facts about buying and leasing to help you decide which is best for you.
Lease
Pros:
- Get more car for less money. Leasing is based on the percentage of the car's price, whereas purchasing is based on the full price of the car.
- Most leases typically last about 3 years which is shorter than the Cadillac warranty. That means your car is covered during the duration of the lease for repairs.
- Resale risks are eliminated since you don't own the car. If the car is involved in an accident, you won't suffer reduced trade values when you return the car, as long as it has been properly repaired by a professional body shop. You are also insulated from market changes that would reduce the trade value of a car you owned.
- When leasing, you enjoy the newest technology since each lease lasts only about 3 years. Once that is over, you could lease a car with even newer technology.
Cons
- The lease price is based on how many miles you estimate you'll drive. Choices include: 10,000, 12,000, or 15,000 miles per year. A fee will be assessed if you are over that mileage at the end of your lease, at a maximum of 25 cents per mile.
- When you lease a car, you are not building equity on that car. You are basically renting a car for that amount of time. At the end of the lease you decide whether you will buy a new car, lease another car, or take out a loan to pay off the current lease to keep it at the end. Instead of a trade in toward your next car, you'll have the money you saved instead.
Purchase
Pros:
- Buying is a good option if you are planning on keeping your car for a longer period of time. Leases are typically 3 years, but purchasing a car allows you to keep it as long as you would like.
- As you continue to make payments throughout your loan of a car that you purchased, you may build equity in the car. The car is then yours and not the lenders at the end of the loan.
- There are no mileage restrictions on a purchased car which is one of the biggest advantages. For someone who drives quite a bit, this would be the better option.
Cons
- One of the drawbacks for purchasing a car rather than leasing is that you don't really know what the resale value will be in the end. If the car is worth less than what your loan is for, then you will have negative equity.
- Resale risks are yours. Market fluctuations, the vehicle's condition and its history will affect your trade value. A vehicle involved in an accident in its past, even if it has been repaired and was not your fault, will bring substantially less in trade. Also, if the model you own gets substantial upgrades or a new version is released, your car becomes outdated and worth less.
- Your warranty may expire before the loan is paid off (depending on the loan term you choose), leaving you making payments AND paying for repairs.
Conclusion
When you go to decide whether to lease or purchase a vehicle, the decision will all depend on your personal situation and what you are looking for in the long run. You need to consider things such as your budget, how long you want the vehicle, if you prefer to drive a newer car more often, etc. Whatever your preference, we here at Plaza Cadillac are happy to help with any decisions you need to make. We will show you what vehicles you are interested in driving home, then we will sit down and figure out together what your best option would be for your preferences.
