Buying a new car is a big decision. There are many things to consider when thinking about your next car purchase. One of the most important decisions you will make is how you intend to pay for your purchase. You have three options: You can pay cash, you can lease, or you can finance your purchase through a bank or lending institution.
As one of the top Chevy dealerships in Kansas City, we here at McCarthy Morse Chevrolet in Overland Park want you to be an informed consumer. It’s our job to make your car buying experience at our Kansas City Chevy dealership pleasant and hassle-free. So we want to break down the key benefits of a Chevrolet lease versus a purchase.
The Pros of Leasing
There are basically two types of leases: A “closed-end” lease and an “open-end” lease. The former is more common as it allows you to walk away from the lease at the end of the term. The alternative, also called an “equity lease,” obligates you to purchase the vehicle at the end of the lease.
With a lease, you may be able to get a more expensive car for your money. Here’s why: Typical car loans are based on the full purchase price of the vehicle. But with a lease, you are paying the difference between the car’s price and its residual value at the end of the lease term. Say a new car is sticker priced at $50,000. At the end of a three-year lease, the vehicle’s residual value is 55% of its original purchase price. That means the car would be worth around $27,500 at the end of the lease. You would then make lease payments on the remaining $22,500 instead of the full $50,000.
Also, if you are looking for a small down payment, or no down payment at all in some cases, then a lease may be right for you. However, your monthly lease payments will either increase or decrease depending on how much money you put down up front.
Another important consideration is that you do not have to worry about depreciation. In other words, since you are only paying to use the car for a set period, you can never be upside down in terms of negative equity.
If warranty coverage is important to you, many bumper-to-bumper warranties will cover you through the term of the lease; especially if it’s a three-year lease, which is more common. Of course, you still are obligated to perform regular maintenance and auto repairs, such as oil changes, otherwise you could be penalized for failing to maintain your vehicle.
If you are a business owner, then leasing a vehicle may have some tax advantages. However, you should speak with a tax consultant before making such a decision for your company.
If you’re someone who enjoys the latest styles, features, and technology, leasing could be for you. And, if you want to avoid the hassle of trading in your car, all you have to do is drop the car off and turn in the keys. Just be sure to read your lease agreement carefully, as with any contract.
The Cons of Leasing
There are also some disadvantages to leasing a vehicle. Mileage, for example, is often capped at anywhere from 9,000 to 15,000 miles per year. You’ll need to pay attention to your driving habits to ensure that you don’t go over your annual mileage allotment, otherwise you’ll be hit with expensive overage fees.
Another thing to consider is that you are, in essence, “renting” the vehicle. Therefore, you’re not building any equity. At the end of the lease, you either have to get a new car or convert the lease into a purchase by financing the remaining balance.
Additionally, most leases require an excellent credit score. If your credit score is stellar, then it’s not an issue. But if it’s a bit tarnished, you may not qualify.
Pros of Buying
If you are someone who just “falls in love” with your vehicle and you plan to keep it a long time, then buying a car may make better sense. Not only are you building equity, but you own the car outright when it’s paid off. And if you’ve kept your car in good condition, eliminating a monthly car payment could save you a significant amount of cash in the long run.
Another thing to consider is that you don’t have to worry about mileage restrictions or any “after-market” customization that usually isn’t allowed with a lease. So if you do a lot of driving, or don’t want to worry about that spilled soft drink or parking lot ding, a purchase may be the best alternative.
Cons of Buying
There are some negatives to buying a car that you should consider. First of all is the trade-in value. If you owe more than the car is worth, it’s called “negative equity.” This situation will impact the purchase of a new vehicle since you will likely have to come up with the difference between what the car is worth and what you still owe on the loan.
Big down payments are another issue with buying a car since most loan companies require between 10% and 20% of the purchase price as a down payment. This payment could amount to several thousand dollars. Also, the loan term will affect your monthly payments. The longer you have the loan, the more the car will cost in interest.
Let McCarthy Morse Chevy Help You Make the Right Choice
Ultimately, your personal circumstances will determine whether a leasing a new car or buying a new car is the right choice for you. Regardless of your decision, the sales and finance professionals at McCarthy Morse Chevrolet are here to help you make the right choice for your lifestyle and your budget.
We have a huge selection of new 2015 Chevy cars and trucks from which to choose. And you’ll save even more with our large inventory of pre-owned vehicles. Whether you decide to lease or purchase, our Finance Center will be there to help every step of the way.
We invite you to visit our Kansas City Chevrolet dealership, conveniently located at 9201 Metcalf Ave., Overland Park, KS 66212. To reach our sales department, please call 877-461-6593.