Lease VS Buy

When it’s time for your next vehicle, you’ll find yourself facing more decisions than simply “what make/model do I want?” The majority of us will end up financing rather than paying cash, but that raises a very important question; should you lease or buy?

The answer is not the same for everyone, so Volkswagen of Naples has created this nifty infographic exploring a few basic questions you should be asking yourself before making this decision. That’s not all there is to it, though, so let’s get a little more in-depth with the advantages and disadvantages
VW Lease VS Buy-2Leasing

When you lease a vehicle, you will end up with a lower monthly payment with less money due at signing than you would if you took out a loan to purchase the same vehicle. This is because you are essentially renting the vehicle for 2-4 years, so you are only paying for the portion of the vehicle that you plan to use. This is great especially when you are considering something brand new as it allows you to get a vehicle that would otherwise be out of your price range.

The lease agreement does have a disadvantage for some people depending on their driving habits. In your lease, you agree to driving up to a certain amount of miles per year (usually up to 15k/year). If you go over these miles at the end of the lease, it can cost you. If you tend to drive a lot, you should consider buying. Another thing that can be held against you in a lease is excessive wear and tear, however, Volkswagen offers several insurance packages for a small fee to protect you from any unpleasant financial surprises at the end of your lease.

Keeping with financial implications, leasing is great for people who can claim their vehicle as a business expense. When tax season rolls around, remember that leases are deductible! You can’t write off the purchase of a vehicle, but you can with a lease.

Leased vehicles belong to the bank. At the end of your lease term, you do not own the vehicle as you would with a loan when purchasing a vehicle. You then have the option toturn in the vehicle and walk away,
purchase your leased vehicle and make it yours, or lease a brand new one! If you like to have the latest and greatest technology and a brand new vehicle, this is perfect for you! Leases generally last 2-4 years and you can get a brand new vehicle once your term is up. You also do not have to deal with the hassle of selling or trading in your vehicle when you are ready for a new one. Depreciation is not your problem!

Leases can rid you of negative equity. Do often find yourself owing more than what your vehicle is worth with every purchase? It can sometimes seem like you’ll never get out from under it – but fear not! If you have great credit and are willing to make higher payments for a few years, you can rid yourself of this negative equity by rolling it into a lease. Your payments will be high for the next few years, but once your lease term is up, you can turn it in and you will not have any negative equity to speak of! It was all absorbed by the lease.

There is one downside to this – you cannot simply turn in your lease whenever you please. You are locked into the contract for the term that you signed for, and it can sometimes be very difficult and expensive to get out early. If you need the ability sell your vehicle at a moment’s notice or keep it for a very long period of time, then leasing might not be for you.

Buying

Let’s talk about the elephant in the room right off the bat: depreciation. Yes, your vehicle depreciates. Its value goes down as soon as you buy it. For this reason, purchasing a lightly used pre owned or a Certified Pre Owned VW can be the most cost effective option – but let’s admit it. There’s nothing quite like that new car smell, and some of us simply cannot resist.

When you purchase a vehicle, unlike leasing, the vehicle is yours to do with as you please. This doesn’t just play on the feeling of ownership; it does have some very important advantages and disadvantages. If you suddenly need to get rid of your vehicle or get something else, buying gives you flexibility to do so. For example, say you purchase a Volkswagen Beetle Convertible and a few months later you find out that you are expecting a little bundle of joy. A small convertible will no longer suit your needs, and you’ll need to opt for something larger like a Passat or a Tiguan SUV. Since you purchased rather than leased your Beetle, you can simply trade it in for something that better suits your needs – and you may even have some positive equity to play with!

The other side of this advantage is that you can keep your vehicle for as long as you want! Some of us tend to get attached and like to keep our vehicles for a long time, and sometimes even pass them down to our children. Buying allows you to do this…. Or not! The choice is yours, and you can decide when you’re ready.

Another advantage is no mileage restrictions! Since the vehicle is yours, it does not matter how much or how little you drive. You can drive cross country whenever you feel like it!

It is important to talk about credit scores too. To lease, you must have excellent credit. If you are concerned about your credit score, or if you already know that it’s on the lower side, then buying will likely be your best bet. Whichever route you take, as long as you keep up with your payments, you can improve your credit score thanks to your new car!

We hope that this was helpful to you! If you have further questions or if you are ready to buy or lease your new Volkswagen, please stop by Volkswagen of Naples or call us at (866) 364-0242.

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