To buy a new car or to lease it out?

Is your old car giving way or are you in your early twenties and finally planning to go for the car you had always wanted? Whatever be the reason for getting a new car, the eternal question of to buy or to lease it out remains relevant for consumers. Every single time. So, if you were under the impression that you need to finalise just the make and the model and brand, think again. This decision of to buy or to lease will seriously impact your finances, and if you find yourself in a tight spot, here is a guide to help you figure out the tough answers!
First off, there is some figuring out you need to do about your available finances and your lifestyle habits. Broadly, these are:
  1. Monthly lease payments are lesser than paying EMIs on loans for purchased cars, for the simple reason that the lease amount is just the depreciation cost of the car against the EMI for a new car, where you are paying the price of owning it for a lifetime. If you need a greater amount of liquid cash every month, it makes sense to lease out a car instead of buying it.  
  2. Weigh your savings to calculate how much down payment you can shell out. Down payments for lease are lesser than those for purchasing, so if you are a young working professional or are low on savings for some other reason, you know leasing is your best bet!
  3. Try to estimate how much you will actually drive the car. If you drive a lot—over 10,000 to 15,000 miles, you may have to pay extra for a leased car, vis-à-vis for an owned car, you can drive as much as you want with only the fuel to worry about. While for an owned car it is true that the more you drive it the more it depreciates, for a leased car every extra mile over and above the lease limit means extra costs. What this amount comes down to, should play a big role in deciding whether you want to lease.
  4. Are you going to use the car for business purposes? Then it makes sense to lease a car as the cost you pay is essentially depreciation cost which will be deducted from your taxes while for an owned car you will not get any such benefit.
  5. Are you particularly rough with handling of vehicles or do you use them with utmost care? If the answer to this question is the former, we suggest not going for a lease, as the added wear and tear will translate into more depreciation and added payments for you. Buying a car is your best bet as at least for the first few years the warranty will cover your damages.
  6. Answer this honestly: How long do you plan on keeping this car? Do you need it for convenience’s sake, and plan to swap it out for the next great deal on the next great model? If so, it is better you lease it out than pay the full price for it and later have to resell it at a depreciated price. If this car happens to be your childhood dream that you saved up for and intend to flaunt around with pride for quite a few years, we suggest you buy the car.
These were the factors you need to carefully consider before deciding whether to buy or lease your next car. A careful introspection into your priorities and a thorough research of the numbers involved, will be your key to the right decision.

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