Financing 201 | Leasing vs. Buying a Car
When you need a car but don't have the cash upfront to buy it, you have two choices for financing. Making the decision between leasing a car and buying a car can seem complicated, but it's a simple matter of assessing your needs.
When you shop for a new car, you'll notice that the monthly lease payments are much lower than the monthly payments on a car loan. Leasing a car is a lot like a long-term rental. You only pay the difference between the price of the vehicle when it's new and the estimated value at the end of the lease.
Why Do People Lease Their Car?
People who lease a car do so for several good reasons. They may want to drive a new car every two or three years and enjoy a lower monthly payment. Since they aren't concerned about owning the vehicle, it's easier to start a new lease every few years than go through the hassle of selling their car and buying a new one.
Leasing also allows you to enjoy the latest technology and safety features. The vehicle is under warranty with the manufacturer during the lease term, so you don't have to worry about incurring additional costs if the car breaks down. Whether you lease or buy a new car, you are responsible for full-coverage insurance, taxes and registration fees.
Insurance Requirements Matter
Depending on the leasing company and the laws of the state where you live, your auto insurance needs may change if you decide to lease a car. In some cases, car insurance is more expensive when you lease than when you buy. It's important to understand those costs before you sign paperwork on a lease.
Pay Attention to Mileage
It's important to be aware that driving a leased car more miles than allowed in the contract means paying a per-mile penalty when you turn the car in at the end of the lease term. When you buy a new car, you are free to drive it as many miles as you want, even if you finance it through a bank or loan company.
You'll get the benefit of the manufacturer's warranty on any new car you buy, but it's only good for a certain number of pre-determined miles or a certain amount of time. When the warranty runs out, you are financially responsible for repairs.
If you decide to buy a new car, it's up to you to decide when and if to sell it or trade it in for a different vehicle. You can also customize the vehicle in any way you please, and you won't have to worry about surprise costs when you return the car at the end of the lease term.
Which Option Is Less Expensive?
Long-term, purchasing a vehicle costs less than leasing. However, if your personal circumstances make leasing a good choice, be sure to shop around for the best deal. Not all leases are the same. Make sure you work with a car dealership and salesperson that you feel comfortable with. Remember, you don't have to go through the dealership for a student car loans, even if you decide to lease a car instead of buying one.
Boro offers auto financing and leasing to college students, even if they don't have a Social Security number or credit history.
To learn more about your options for student car loans and to find out how Boro helps people from abroad who are studying in the U.S. to establish a credit history with our unique financial services, please contact us.