Let's face it, who has around $5000 to $25000 to spare for a brand new car? And I mean to spare, as in you won't be nearly broke after purchase. If you did have that kind of money to spare, wouldn't want to spend it all in one go. What happens if, heaven forbid, there was a medical or a personal emergency in the family?
One of the biggest purchases you can make is a car, which is why it'd be pertinent for you to check out all options available. Just as with a house, buying a car vs leasing a car both have advantages and disadvantages.
Perhaps the most obvious difference with buying is that once you're done with the payment/s, whether outright, through a loan, or in installment, the vehicle becomes yours to sell, donate, or keep. With a lease, on the other hand, you can get a car every few years. You don't have to worry about selling the car later on. Just hand over your keys to the dealer and get a new lease. You can also have the vehicle transferred to your name, or simply upgrade to a new car.
Before you decide to buy or lease, here are a few things you should consider:
If you're going to be driving a lot, you might want to check your lease agreement. Typically, you have to pay extra for miles over 15,000. While cents per mile over doesn't seem like much, they do tend to accumulate if you're not careful. In the same manner, how hard you are on the car matters. Remember that you actually have to pay for the wear and tear of the car if you're prone to getting scratches and scuffs around.
Your cash flow
Compared to buying outright or getting a car loan, leasing a car typically has a lower weekly or monthly payment. This is because you're paying for the car's depreciation rather that the vehicle cost. If you need access to more cash every month, consider leasing rather than buying. Remember that "cheaper in the long run" doesn't mean anything if you're going to go broke now.
Cash on hand for big ticket purchases
Buying a car outright or even getting a car loan typically requires a sizeable chunk out of your pocket for either the total car price or the down payment. Car finance in Australia has much lower deposits, and can sometimes even discount or waive the initial payments. Alpha Finance, for example, can bring down its deposit from the standard $990 to $490 during specials. That means you get to drive away in your own car for less than a $1000. You don't need to go broke trying to make life a little easier.