Take this Should I Lease Or Buy A Car Quiz to find out. We update the quiz regularly and it’s the most accurate among the other quizzes.
Choosing between buying and leasing a car is frequently a difficult decision. On the one hand, buying has higher monthly costs, but in the end, you own an asset—your vehicle. A lease, on the other hand, has lower monthly payments and allows you to drive a vehicle that is more expensive than you could afford to buy, but you are locked into a cycle in which you never stop paying for the vehicle. With more people opting for a lease over a loan than just a few years ago, the leasing boom isn’t going away anytime soon.
Purchasing a vehicle with a traditional car loan is simple. You borrow money from a bank, credit union, or other lending institution and pay it back in monthly installments over a set period of time. A portion of each payment is used to pay interest on the loan, while the remainder is used to pay down the principal. The larger the payment, the higher the interest rate. As you repay the principal, you accumulate equity until, at the end of the loan, you own the entire vehicle. You can keep the car for as long as you want and treat it however you want. The only consequences of modification or abuse could be repair costs and a lower resale value in the future.
As car prices rise (exceeding $46,000 by the end of 2021) and buyers begin to demand the latest safety features available only on newer vehicles, leasing has become a popular alternative to buying. A lease requires buyers to make a monthly payment in order to drive a new car for a set period of time. That payment is frequently less than the monthly cost of financing a new vehicle, but buyers are required to return the vehicle at the end of the lease term. Also, you must try to play this Should I Lease Or Buy A Car Quiz.
Should I Lease Or Buy A Car Quiz
With more people working from home than ever before, mileage restrictions on a lease may not be an issue for many customers. On the contrary, many people may discover that they do not use the miles they have purchased.
The predictability of payments and ownership costs (no costly repairs while under warranty!) is appealing. However, life can be unpredictably unpredictable, and a lease provides less flexibility than a purchase.
We look at the pros and cons of leasing and buying to determine which is best for you.
The Benefits of Leasing
On the surface, leasing may appear to be more appealing than purchasing. Because you are not repaying any principal, your monthly payments are usually lower. Instead, you’re simply borrowing and repaying the difference between the car’s new value and the residual—its expected value at the end of the lease—plus finance charges.
The Primary Benefits of Leasing
You operate the vehicle during its most trouble-free years.
You’re always driving a late-model vehicle covered by the manufacturer’s new-car warranty.
Free oil changes and other scheduled maintenance may even be included in the lease.
You can drive a more expensive, better-equipped vehicle than you could otherwise afford.
Your vehicle will be outfitted with the most up-to-date active safety features.
You don’t have to worry about the car’s trade-in value fluctuating or the hassle of selling it when it’s time to move on.
For business owners, there may be significant tax benefits.
Finally, you simply return the vehicle to the dealer.
About the quiz
Difficult to Compare
It’s difficult to draw a fair comparison between, say, a six-year loan and a standard three-year lease. The bank borrower still has three years of payments remaining when the lease expires, but the lessee must look for another car—or perhaps accept the lease’s buyout offer.
A lease can also be subsidized, also known as “subvented.” The automaker can either take money off the top with a special lease rebate, or it can raise the residual, or both.
An automaker may also include additional rebates on a lease deal that a loan customer would not receive. Furthermore, the “money factor” (interest rate) on a lease may differ from the interest rate on a loan, making an apples-to-apples comparison difficult.
In general, two consecutive three-year leases will cost thousands more than purchasing a car (with a loan or cash) and owning it for the same six-year period. And the savings grow for car buyers if they keep the car for another three years, for a total of nine years, even after accounting for expected maintenance and repairs.
If the limitations of a lease turn you off, consider purchasing a less expensive new car or a well-maintained used car, such as a certified pre-owned vehicle from a franchised dealer, or obtaining a longer loan term. Whether you buy your new car with cash, a loan, or a lease, you can save money by selecting one that holds its value well, is dependable, and has good fuel economy.
Buy used to save money both upfront and in the long run. Also, pay in cash.