Leasing a Car
When thinking about buying a new car, many people struggle with the choice to finance or lease. As with any significant purchase, there are many things to consider with regard to financing, and leasing a car presents a good option for many people. That being said, there are also some negatives, so it is important to factor in everything that may impact your financial position.
Leasing a car is often a great option for those individuals that are self-employed, since you can write off some (or even all) of your car lease payment as a part of your business expenses. This tax benefit may be a great way to save on something that you already need.
Mileage is another important factor. If you do not drive your car a lot, and can stay under 20 000kms a year (for example), leasing a car might be a smart choice. However, if you do a lot of driving, leasing a car can become expensive when it comes to the end of the car lease term. Mileage overages can get expensive, and so if you go over your allotted mileage allowance, you can end up paying out a lot.
The peace of mind that comes with leasing a car can also be an attractive incentive. Because car lease terms are usually from 2 to 4 years in length, you often don’t encounter those costly repairs that come with owning a car that is older – and if you do, these repairs are often still covered by a warranty.
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Another pro with leasing a car is that interest is often lower than a car loan. Many car companies now even offer 0% leasing, meaning that you are really just paying for the car and any costs associated with it (taxes, fees, etc.).
The option to buy out or not at the end of the lease is also an important thing to consider. If you want the equity that owning the car represents – (a good option to sell the car once paid off or continue to drive it without a car payment), a car loan may be best. If you like having a new car every few years (and can afford the continued monthly payment), leasing a car might be the right choice. It is important to look realistically at your needs in order to make the right choice.