Opting to lease a car presents an attractive alternative to purchasing one outright. Effectively, leasing means that you are hiring the vehicle from the dealership, and it’s your responsibility to maintain the car in top shape. However, one major advantage of leasing is the potential for trading up to a newer model far earlier than if you had bought the car outright. This is because, much like a rental agreement, your lease contract will invariably conclude.
When that time arrives, the dilemma surfaces: do you put in a bid for your leased vehicle or go for a trade-in? Like all decisions, pros and cons shadow both options, making it crucial to thoroughly evaluate your choices. Here are a few critical points to ponder when contemplating purchasing your leased vehicle as the contract ends.
HOW MUCH WILL YOU SHELL OUT?
Predicting a car’s value several years post manufacture is not a precise art, and sometimes, dealers and companies might err. If this happens, buying your vehicle might be a savvy move. Begin by scrutinizing your contract and the purchase option price, and then deduce the market value. If the car is priced lower than its worth, purchasing your car would be a smart move. Don’t overlook the purchase-option fee while working out this value.
In rare situations, if your car’s current worth is below the buy-out price, you could negotiate with the dealer, hence potentially landing a much cheaper deal than a brand new car. The reverse could also occur— owing to the car’s valuation, saving money might not be feasible, encouraging you to venture elsewhere.
WHAT IS THE VEHICLE’S CONDITION?
Leasing a car demands that you take good care of it, as factors like mileage and the presence of any scrapes or paint chips will affect how much you end up paying if you opt to buy it. While the number of miles you are allowed per year is typically limited on a lease, any excess will cost you unless you buy the car. In the case of dents and scratches, you can sidestep penalty fees by buying the vehicle.
If the car has been well-maintained, purchasing it could be a beneficial choice. Ideally, if the upkeep is immaculate, the mileage has been kept low and the pricing is right, it’s worth the investment.
CONSIDERING THE LEGWORK INVOLVED
One undeniable plus point of buying your leased car is the convenience it offers. Price negotiations can be stressful, but buying your leased car omits this headache. Moreover, while hunting for cars can be enjoyable, it’s also quite time-consuming and potentially frustrating. Purchasing your leased vehicle can save you considerable time and hassle.
ASSESSING THE CAR’S MAKE AND MODEL
Another vital factor in your decision-making process is the car itself. If the vehicle you’re leasing is popular and high in demand, it may be worth more than its residual value, making a lease buy-out a viable choice. Additionally, leasing allows for ‘test-driving’ a model without a full commitment. If you find yourself attached to the car, buying it might be the next logical step.
Conversely, if your car has been unreliable or required numerous repairs, it may be worthwhile reconsidering your options. While leased cars are usually covered by a warranty during the lease period, warranties often terminate with the lease.
Regrettably, a car that has required multiple repairs usually suggests that it’s not fit for long-term use, meaning it might turn out costly in the long run. If this is the case, buying such a vehicle might not be the smartest financial decision.
Ultimately, consider the car’s performance and how fond you are of it. You need to weigh all factors, conduct adequate research, assess your financial standing and the pros and cons of every option. Making an informed decision that suits your lifestyle and finances is critical.
