Friendly Collision Center

Buy or Lease? Ahh, Now That is the Question

I would bet millions of people every year ask themselves the $64,000 question--to lease or to buy, what is the best way to go? While many people all over the country are now choosing to lease a car versus owning one, many folks still don’t completely understand what they’re agreeing to when they sign on the dotted line. It's very important for any consumer to fully understand exactly what a vehicle lease is and be able to discuss the details of their lease or purchase agreement with the dealership before signing anything.

In short,leasing a car is essentially renting a vehicle for a set period of time at a fixed or agreed-upon price, after which the vehicle  is returned to the dealership  upon the expiration of the stated lease period. It's considered a viable solution for many people who don't want to physically buy a car. Below here at Friendly Collision Center we’ve compiled some often asked questions that each individual can consider in Dallas, TX and all over the country  when they're weighing the pros and cons of car leasing versus buying.

Which is smarter—buy or lease?

For many people, leasing versus owning a car is the better solution for their lifestyles. They believe that leasing offers them more advantages as opposed to purchasing a car outright. One of the greatest of these benefits is the fact that a driver will always be driving a current model for half the actual price that they would pay if they were to purchase the car. For people who want to drive state-of-the-art vehicles all the time, leasing just makes sense.

What are the conditions and terms for leasing a car?

While all of the terms and conditions required for leasing a vehicle are fairly extensive, one that should never be overlooked is the speed limit or rate of fuel consumption portion of the agreement. This implies that the driver is required to put down a security deposit in case of possible damage to the car resulting from operating the vehicle in excess of speed limit. Upon the conclusion of the lease, the security deposit is returned to the customer if the vehicle is in a good condition.

Would there be any additional consequences if I go ahead and exceed my mileage allowance?

Going over the limit of your mileage or fuel consumption rate will definitely produce an additional charge based on the overall amount of miles that you exceeded. For this reason, leasing a vehicle may not be a good option if you are someone  who drives many miles regularly. There are various online vehicle lease mileage calculators out there, which can assist you in forecasting any mileage exceeded and the fees you will eventually be charged.

What does a leased vehicle residual value mean to me?

The predicted value of a leased car at the end of a lease period is considered to be its residual value. This residual value of your leased vehicle is what determines your monthly payment on your lease since you only pay for the period during which you use the automobile.

According to a lease agreement, will I be rewarded for returning my lease car before the lease period expires?

Returning your leased vehicle prior to the expiration of the lease period may actually have negative impact on your total credit score, and this is because most car dealerships see the act as repossession. To this end, several dealers will ensure that the lease agreement includes sanctions and fees when your lease car is returned before the lease period is over, even though they are saving on the wear and tear on the car.

Sources: AAA, Yahoo and Consumer Reports