Car Loans – Buying versus Leasing a Car

Car Loans – Buying versus Leasing a Car

Car Loans – Buying versus Leasing a Car

The price of a new car continues to escalate, with many new models now priced over $30,000. As prices continue to increase, so too does the number of Americans considering leasing a car instead of buying it outright. So we take a look at buying vs. leasing a car.
Leasing, which is essentially renting a car for a specific period of time, can lower initial costs, but there are several other factors to consider when you're deciding whether to lease or buy. For example, are you using your car for business or personal purposes? If it's the latter, your lease payments can be written off as an itemized business expense. When leasing a car for business, always make sure that you keep track of your mileage.
You also need to determine whether you want an open-ended or closed lease. An open-ended lease will allow you to drive unlimited miles, but that will significantly reduce the resale value of the vehicle and result in a higher payment. Closed leases limit your miles, typically no more than 15,000 per year. If you exceed the allotted amount, you will be responsible for paying for the excess miles.
Whether you buy or lease, you will be responsible for paying for any minor body or interior repairs. But, if you are buying, you can decide whether or not you want to pay for the repairs or just live with the slight damage. If you lease, you will more than likely be required to pay for the repairs.
Buying a car will allow you to finance the amount over a longer period of time. In some cases, payments can be extended over 72 months. But, you have to consider the cost of the car and whether it will still be in driving condition by the time the payments end. Shorter-term financing will result in higher payments, but it will typically be with a lower interest rate and will allow for a greater trade-in value.
Regardless of whether you decide to buy or lease, check with multiple dealers and websites to find the best value. That way you can go car shopping with peace of mind and find the vehicle that not only fits your style, but your budget, too.

This information is not to be used as investment advice, but for informational purposes only. Republic Bank & Trust Company prohibits the dissemination, distribution or copying of this document without the Bank's prior written consent. Please consult your financial or tax advisor for further information. Member FDIC.