Choice be­tween leas­ing and buy­ing de­pends largely on the buyer's pri­or­i­ties

Ignition - - Front Page - BY JUSTIN PRITCHARD

To lease, or to buy: that is the ques­tion—and one of­ten fraught with num­bers, ter­mi­nolo­gies, and con­fu­sion. What's the cor­rect an­swer? There isn't one, since the choice to lease or buy de­pends on a list of pros and cons based on needs, life­styles and pri­or­i­ties.

There's no sin­gle so­lu­tion to the lease vs buy co­nun­drum that's al­ways cor­rect, though it does help to un­der­stand two prin­ci­ples. First, as part of the process of de­pre­ci­a­tion, ve­hi­cles wear out a lit­tle bit, ev­ery time you drive them-- with added miles and wear re­duc­ing its value over time.

Sec­ond, your ve­hi­cle has a fi­nite life­span as your ve­hi­cle. At the end of this life-span, you'll get rid of it, in ex­change for an amount of money, called the resid­ual value.

The sticky? Your ride is con­stantly be­ing de­pre­ci­ated to its cur­rent resid­ual value. In mat­ters of leas­ing ver­sus buy­ing, where you stand to ben­e­fit or lose at the hands of th­ese two con­cepts, is vari­able.

Pur­chase a car out­right, and it's all yours, and you can freely rack up mileage, mod­ify, and use the ve­hi­cle, as you please. You'll fork over an amount of money com­prised of the pur­chase price if you pay cash, or any fees and a down pay­ment if you fi­nance. You own the car, you'll pay for re­pairs and re­place­ment parts as it ages, and one day, you'll sell or trade it in, for its resid­ual value.

Lease a car, and you'll make your first monthly pay­ment up front, as well as cov­er­ing any fees and a down pay­ment. The lease is set for a cer­tain pre-de­fined time pe­riod, called the term, dur­ing which you'll make th­ese pay­ments. At the end of the term, the leas­ing com­pany gets the resid­ual value of the ve­hi­cle when you ei­ther buy it out, or give it back.

Dam­age and wear to paint, tires and the in­te­rior of a leased ve­hi­cle, beyond an ex­pected norm, can re­sult in added charges at the end of the term. The resid­ual cost, (but not the added wear-re­lated costs), are laid out at the lease's on­set. So is a mileage limit. Ex­ceed it, and you'll be charged ex­tra at the end of the lease, too.

As such, usu­ally, monthly lease pay­ments are lower, be­cause you're ba­si­cally pay­ing the leas­ing com­pany for the use of a ve­hi­cle which they own. As such, leas­ing amounts to a long-term car-rental plan: you wind up with use of a new ve­hi­cle for time, but you've got to give it back, or buy it, when you're fin­ished.

So: lease or buy. Which is bet­ter? The an­swer is `it de­pends'. If you're a higher mileage driver keen on pride of own­er­ship and you can foot a higher monthly pay­ment, buy­ing might be the best op­tion.

If you're a lower-mileage driver, seek­ing lower pay­ments, or if you en­joy be­ing in a newer ride that's re­placed ev­ery few years, leas­ing may make more sense.

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