To lease or to buy — that is the question.
Okay, maybe Hamlet wasn’t getting philosophical about car loans, but the decision between leasing and buying a car, truck or SUV is a big one.
These days, very few shoppers are paying cash for vehicles in Bismarck. Leasing is a popular alternative to taking out a car loan, but how does it stack up against traditional financing?
We broke down the pros and cons of leasing and buying — along with a few scenarios where one may make better financial sense over the other.
If you’ve got a fear of commitment, leasing is a great route for you.
Eide Ford generally offers leases from 24 to 48 months. This means every two to four years, you’ll have the newest car with the latest features. At the rate technology is changing in our world, this ensures your car or truck comes with the best in connectivity Ford has to offer.
Leasing also brings peace of mind. Any new car, truck or crossover typically comes with a bumper-to-bumper warranty. If you do need repairs (a rarity on a brand-new car anyway), they’ll be covered by that warranty, leaving you with little out of pocket costs.
The most important benefit to a lease, though, is the affordability.
When you lease a car, you only finance a portion of the vehicle’s total cost — just for those months you’re going to be driving it. If you were to buy it outright, you would be financing the cost of the whole purchase price — this means your lease payment will be much less than a purchase payment.
Leasing sounds pretty great, right? But it’s not perfect. Here is the factor that might be an issue for you.
How much do you drive? Leases come with mileage restrictions. Most are around 10,000 to 15,000 miles a year, and if you go over that total, you can face a $0.15 to $0.25 per mile overage fee.
This is the biggest factor against leasing for some people — especially those who commute long distances or live in rural areas.
Bells and whistles not your thing? If new technology doesn’t matter to you and you want to keep your vehicle for a long time, buying is definitely a better option for you.
When you purchase, the car is yours when the loan is paid off — and you’re gaining equity throughout the length of the loan.
And in contrast to those who lease, you have no mileage restrictions. You can drive from Washington state to Washington, D.C. once a month and the only repercussion is wear and tear on your car (and your waistline from all that road-trip food).
If you don't have a ton of money for a down payment or a good vehicle to trade-in, getting a Bismarck car loan may be difficult.
It may also be hard to get the vehicle you want and still be in the sweet spot for monthly budget and payments. However, new vehicles will always have a lower interest rate versus used vehicles.
Buying a vehicle also comes with the understanding that after the warranty is done, you are responsible for any repair work that needs to be done. Keeping a vehicle longer can become more costly with any fixes that need to happen.
Let’s take a look at the financial breakdown of a Bismarck lease versus an outright purchase.
Maybe you find a car on our lot with a $30,000 purchase price. If you finance the purchase at 3% for 36 months with a $1,000 down payment, your monthly payment would be $872. Over the life of that loan, you would pay $31,392. (Side note: If you trade your vehicle at Eide Ford, those numbers would be different. We're leaving the trade out of this equation to keep it simple.)
Now, let’s pretend we’re leasing the same car for 36 months with the same $1,000 down payment. Here, your monthly payment would be $500 and you would pay $19,000 overall.
But like we said, there are life factors to take into consideration — mileage needs, technology interests, and repair options.
There’s no best option in buying versus leasing. Everyone’s situation is different.
At Eide Ford, we can help you look at both options and determine whether buying or leasing works best for your lifestyle.
Our sales staff is ready to help make your car experience as hassle free as possible and share the options you have when it comes to leasing — or buying — your next Bismarck vehicle.