Should you take out an auto loan or lease instead?
For some people leasing a car is a great alternative to actually purchasing one with an auto loan. Leasing does have a lot more string attached to it though. When you buy a car, even with a loan, things are pretty straightforward. You borrow a certain amount of money to buy the car and you make monthly payments. Period. Leasing is not so simple.
When you lease a car you will have to make monthly payments similar to when you purchase a car with a loan. The main difference here is that the lease price is usually lower. But, and this is important, there are many extra charges that will be applied to you bill over time and these can break the bank.
You will only be allowed to drive a certain amount of miles each month and if you go over this limit you will be charged per mile. That can really add up. And this is only one of the many, many fees that you will find popping up when you lease.
Leasing is good for some people though. If you do not do tons and tons of driving and you absolutely have to have a new car every couple of years then leasing may be your best option. If you were to purchase a new car every two years you are looking at a lot of hassle. You have to buy it and then go through the process of selling it, which let me tell you is a giant pain, and then you have to buy all over again and repeat the process. You will also have to contend with depreciation value, which means that you will never get all of your money back if you purchased the car brand new.
If you were leasing however this would never pose a problem. All you have to do is trade the old car in for a new one and drive away into the sunset. Before you decide if leasing is right for you, you will need to take a good look at your situation.