Which option makes the most sense?
The answer to this question depends on how you plan to use the
vehicle. If you like the idea of driving a more expensive vehicle for a
smaller monthly payment, leasing is a great option. However, if
eventually owning the car is important, financing with a loan is the way
to go.
What are the restrictions of driving a "borrowed" vehicle?
Annual
mileage restrictions are a major limitation for customers who choose to
lease. Lessors want their vehicles returned in saleable low-mileage
conditions, so they place mileage caps on them. A typical yearly figure
is between 12,000 and 15,000 miles. Beyond the established limit, fees
accrue on a per-mileage basis, usually in the range of $0.10 to $0.25
per mile. So if most of your driving is local, leasing makes sense.
However, if you consistently tack on 500 or more miles a week,
definitely look into a loan.
What are the other virtues of a loan?
Loans
are also sensible for those who want to customize their vehicles, plan
on keeping their cars for long periods of time and plan to re-sell their
vehicles to help recoup the costs of ownership or expenses of
additional cars. For those who quickly wear vehicles out, loans may be
safer bets as lessors often add "excessive wear" charges if the car is
returned with wear over the limits established by the contract.
Why lease?
Leasing
ensures that you'll always drive a late-model vehicle, won't have to
pay for warranty-covered repairs and won't have to bother with
re-selling at the end.
