How do I decide if I should buy or lease? The lease offers usually advertise lower monthly payments.
There is no “one size fits all” answer to this question. When you choose the vehicle you want to purchase or lease, give the dealer the opportunity to show you both options. There are three important questions to evaluate if leasing is a good option for you:
1. How many miles do you drive per year?
2. How much cash do you want to put down?
3. What is your long-term plan for a vehicle? Specifically, are you planning on driving a new vehicle at the end of the lease term or are you more inclined to drive the same vehicle for the long-term?
I encourage you to watch our 2-part series on You Tube to help you make an informed decision on Buying vs. Leasing. The advantages of leasing often outweigh the purchase option. You can lease a vehicle with minimal or no money down. You’re getting a new vehicle during the best years of its life; when the vehicle is unlikely to need expensive maintenance and repairs.
Most leases are 24 or 36 months. Toyota even includes their Toyota Care package with leases and it is under warranty for factory scheduled maintenance for the first two years. Factory scheduled maintenance will cost you nothing! Leasing has become increasingly popular, especially due to low interest rates. Approximately 25% of all vehicles nationally are leased and over 1/3 of Jaffarian Volvo Toyota vehicles are leased.
Mileage is an important consideration when evaluating leasing as there are costs associated with exceeding the annual mileage requirements. If you drive 12,000 miles or less a year, I recommend you strongly consider leasing given all its other benefits. If you drive more miles, we can evaluate with you the option of paying more for your lease to cover additional mileage to make sure it works for your driving habits and your budget.
As you evaluate leasing vs. buying, put a pen to paper comparing the timeframe of costs during the leasing terms (usually 24-36 months) vs. the total cost of ownership of how many years you would likely keep the same vehicle if you purchased. For some people, buying makes perfect sense as they drive in excess of 20,000 miles per year and they like to keep vehicles many years. For a lease, factor in the benefit of maintenance coverage for the full lease or for partial term, then compare your total cost to monthly payments and maintenance costs including tires, brakes and wear and tear that you would likely incur over the time period for the same vehicle if you purchased.
We at Jaffarian Volvo Toyota are available to answer any questions and to help you make an informed decision that is the best to meet your personal needs and budget.
To review the most important points to making your decision:
1. Know your cash flow and the true cost of the vehicle:
• Evaluate what’s important to you and your household finances in terms of cash flow as importance factors in deciding whether buying or leasing is best.
• Compare apples to apples – monthly lease payments and any time period within the lease where you may incur maintenance costs vs. monthly payment plus costs associated with maintenance and wear and tear.
• Manufacturers continually offer various lease incentives, which need to be factored into the total cost. Don’t just compare money down and monthly payment; this broader view will reveal the true cost.
2. Determine your vehicle lifecycle preference:
• What matters most to you – having a new vehicle every few years or driving one for many years?
• You need to consider the type of vehicle you want to drive and how economic factors could impact its future trade-in value. For example, you may want to buy a big SUV, but a gas crisis or recession can impact its resale appeal…and trade-in value.
• Tell the dealer your preference – and then get a clear understanding of your options. For example, if you’re tempted by a lease, but ultimately want to own a vehicle, you always have the final option to buy it at the end of the term.
• How many miles do you drive each year?
Please visit Jaffarian Automotive and speak with our sales staff and financial advisors to learn more about the best option for you. We are committed to earning your business by helping you make an informed decision that works best for you.