The best option, buy a car or lease a car?

Some people choose to purchase our vehicles and some of us choose to lease them. The question is which is best choice to take, car leasing or car buying?

Look upon a car lease as a long term rental. You do not own the vehicle and at the end of the lease you will then return it and pay any end of lease cost that is due, to complete your contract.

In contrast when you buy a car and pay for it with a loan, the car remains your property at the end of the loan period. If you then wish to buy a new vehicle it will be up to you to trade in or sell the old one.

Most new cars will lose their value as soon as you drive it out of the sales room! It also depreciates with age and as the mileage is larger.

Lease payments will cover just the portion of the cars value that you use during the time you drive it, the depreciation and not its complete cost. Finance charges are added on to your payment.

When buying a car with a loan you are liable to pay back its full cost, plus finance charges. Depending on your deposit or value of your trade in car, this can result in higher payments than for a lease, even if you get a long term loan.

At the end of the lease you may be liable to pay excess mileage fees. A maximum mileage is usually stipulated that you can drive during the lease period. It is policy that you would repay a charge per mile for every mile driven over that limit. However, you can often buy extra mileage at the beginning of the contract at a cheaper cost than you would pay for the extra mileage at the end!

Regarding damage to the car, the leasing company would naturally expect a degree of wear and tear. However the car will be inspected for any damage or extra wear and tear when it is returned at the end of the contract.
A fee would also have to be paid should you elect to end a vehicle lease early.

It is a misconception that the car lease firm takes responsibility for the maintenance of the car during the contract period. You will be responsible for the costs of maintaining the car, as if you owned it.
Warranty repairs will be honoured no matter who owns the vehicle. Usually you will find that lease terms end before a vehicle goes out of warranty.

The best way to try to get an idea as to the deal that would suit you best is to work out how much you would actually be prepared to pay to own a vehicle. Add up the payments you would make on the car and then compare that to the value when the payments cease. Vehicle ownership does not usually make money unless maybe when buying a classic car.

So, is it best to lease or buy?

Leasing:

A car lease might be best if you need a new car every two to three years.
You would obviously prefer to drive a new vehicle but cannot afford to to do so.
On average you drive 15,000 miles or less each year.
You would not be using the vehicle in such a way that it would cause excessive wear and tear.
You are not in a position to make a large down payment.
You use the car for business and can write off your lease expenses.

Buying:

You plan to pay off the car and keep it to avoid loan payments.
You are in a position to pay for repairs after the warranty period has passed
You put more than 15,000 miles a year on a car
You have credit issues and if this is the case it will be easier to buy than to lease
You may intend to exchange it in for another car in less than two years

Is it best to buy new or second-hand cars?

Today it seems that it is quite a sensible move to buy a second hand car. There is no reason why they should not be reliable if you buy them through a trusted source or do your homework on the car before you commit to buying. It also makes great financial sense in that as soon as a new car is driven off the forecourt it starts to lose money, whereas a second-hand car has already made this loss.

When you take the plunge and buy used you can normally afford to go for a more upmarket model than if you were buying new.

Maybe a disadvantage to buying used would be that financing is often more expensive although this could be offset by cheaper insurance rates. If however you prefer to lease a car then a used car is not a viable option. You could also be missing out on some of the latest gadgets and safety devices and I suppose there is nothing better than the feeling that you are the first owner of a brand spanking new car!

A lot of the first time buyers of cars are youngsters who really cannot afford the expense of a new car.

One of the most popular cars for teens is the Honda Civic.The Civic is one of the most excellent small sporty cars around and is quite reasonably priced. This car is fuel efficient and is very safety orientated with antilock brakes, front seat side airbags and side curtain airbags which are all standard on these models. It has a body shell which is designed to withstand an impact with a much heavier car. There is the choice of a jazzy coupe or a more sensible sedan.

The Mazda 3 has earned a reputation for being economical and great fun to drive. It has plenty of power, great looks and superior handling.

Another favourite is the Ford Focus because they are quite cheap plus they have a system which allows the use of ipods and cell phones with voice commands which mean the driver can keep their eyes fixed firmly on the road.The sporty Focus coupe is very popular as it offers the same amount of back seat and trunk space as the four door version.

The car that the teenage driver will probably be best suited to must surely be the safest and also the most economical to drive.