[Infographic]: Buy vs Lease a Car
Debates over buying versus leasing cars can get pretty heated! On the one hand, many consumers love the idea of owning an asset outright; while it seems just as many others are drawn to driving away a brand new model every few years.
If you’re pursing auto sales training, be prepared to discuss the merits of buying versus leasing both in class and out on the lot once you’ve landed your first job.
A good auto sales and leasing program will teach you how to assess each consumer’s wants, needs, driving habits, and budget – which will ultimately determine whether purchasing or “borrowing” works best for them.
So while it’s tough to generalize, there are some typical pros and cons when it comes to buying or leasing. Check out our handy infographic for a run-down of the basics.
Ownership
Buy: Each payment builds equity in your car; ultimately you will own it
Lease: Your car is owned by the leasing company; you pay a monthly fee to “borrow” it
Financing
Buy: Your loan will have to cover the full cost of the car
Lease: Your loan need only cover the expected depreciation of the car
Monthly Costs & Financing Term
Buy: Average is $549/month, for a term of 72 months
Lease: 30-60% lower than loan payments, for an average term of 36 months
Modifications
Buy: You are free to modify or customize the vehicle in any way you like
Lease: You must return the car, exactly as is, at the end of your lease
Mileage
Buy: The car is yours; you can rack up as many miles as you want
Lease: You’ll be limited to an average of 13,000 miles per year; overage results in extra charges (approx.
13 cents per mile)
Excessive Wear & Tear
Buy: It lowers the car’s re-sale or trade-in value, but you’re only held accountable to yourself
Lease: You’ll have to pay the leasing company a cash penalty for “above normal” wear and tear
Turnover
Buy: You’ll have to pay off your existing car before you purchase a new one
Lease: Every 3-4 years you can trade in your car for a brand new model
Popularity
Buy: Nearly 70% of Canadians choose to buy cars using 6-8 year term loans
Lease: About 20% of Canadians lease cars; more than 50% buy their car at the end of the lease
Sources:
http://www.marketwatch.com/tools/carleaseorbuy
http://www.consumerreports.org/cro/2012/12/buying-vs-leasing-basics/index.htm
https://www.carbuyingtips.com/glossary.htm
http://globalnews.ca/news/1133080/the-rise-of-the-8-year-car-loan/
