People love to argue about which is better – leasing versus buying a new car. Lease lovers will point out that they always get to drive a brand new or late model car, have maintenance taken care of, are covered if anything on the vehicle breaks and rarely have to think twice about their vehicle situation until end-of-lease-time comes. It’s an arrangement for those that love to drive new cars and prefer convenience over building equity. You can read more about the pros lease lovers gush about over leasing at Cars.com.
You can also read about all the wonderful aspects of car ownership on the site too. While it is true that when you drive a new car off the dealership lot it does immediately depreciate in value, if you have a fair interest rate on your car loan, you’ll surpass that depreciation level with equity in no time. By buying your next car, you will get to a point where you actually own it. The car will have monetary value that you will be able to take advantage of either when you sell it or trade it in for your next car. If you’re buying new, many manufacturers are including service programs to incentivize the sale. Many of these programs cover the cost of regular maintenance on the vehicle for a fixed period of time, usually about two years after the sale. Since new cars also come with warranties, you won’t have to sweat too much worrying about major mechanical problems costing you an arm and a leg. Most new cars come with two types of warranties – the bumper to bumper warranty and the powertrain warranty. The bumper to bumper warranty usually covers all the pieces of the car from one end to the other like sunroofs, power windows, seat functions, radio and things like that. This type of warranty typically lasts for about three or four years of ownership. The powertrain warranty, on the other hand, covers the car’s engine and transmission, the parts of the vehicle that make it run. These warranties tend to last a bit longer than the other type and some manufacturers even extend powertrain warranties for the first 100,000 miles on the vehicle. These warranties protect car owners from huge mechanics bills for major problems that might arise during ownership.
In the end, it always makes more sense financially to work toward owning something. When you buy your car, eventually you’ll build equity in it which could be compared to a savings account of sorts. When you lease, you’ll never have this equity scenario. Buying a new car versus leasing a car is very different and leasing works well for some while buying makes sense for most.