The cost of leasing a vehicle. The lease fee equals the monthly lease payment multiplied by the lease term. See also capitalized cost and residual value.
One of the major decisions you will have to make when you need a new car is whether to lease or buy. If you don’t have enough money for a standard down payment on a car, leasing might be the best option for you. Similarly, if you like to get different cars every few years and you are not interested in making changes to the factory settings on a car, a lease might be the best way for you to go.
But if you plan to keep your car for a number of years and you have a substantial amount of money for a down payment, you might find that buying a car is the best plan. When you buy a car, you might have to get a loan, but you can get the car with the features that you want and it’s yours.
If you are still on the fence about whether to lease or buy, keep in mind that leasing may be able to get you lower interest rates than a car loan. So if you are on a tight monthly budget, leasing might work best for your finances. However, there might mileage restrictions on a leased car, so if you put a great deal of miles on your car each month, you might want to consider buying instead.
Remember that both leasing and buying a car come with pros and cons and you will need to determine if the lease fee works better for your financial picture than buying a car. Work out a monthly budget and see if a lease fee fits comfortably with room left over for your other expenses. Also be sure you understand the terms and rates on loans and leasing agreements before you commit so you can fully understand what you are getting into. Being stuck in an arrangement you can’t manage means you run the risk of damaging your credit and losing your car.
July 11, 2006
