Buying or Leasing – Which Suits You Best? The Experts at South Bay Lincoln Are Here To Help
It’s inevitable. When shopping for a new Lincoln the question comes up – should I buy or should I lease? Both options have their similarities and differences and their advantages and disadvantages, but either way, you'll get a Lincoln no matter which one you choose. It's important to have decided on your ultimate goal.
Leasing a Lincoln
Leasing a Lincoln is somewhat but not exactly like renting it. You sign a lease for a fixed term, usually two to years, and make a monthly payment with a fixed interest rate until your lease is up. At the end of your lease, you can lease or buy another Lincoln.
If you are only driving a limited distance each month, you might want to consider leasing a Lincoln. Be aware that after signing the lease and making payments for the term of the contract that you'll return the car and walk away with no equity.
On the other hand, if you have plans on keeping the car for more than two or three years, or you drive a great deal each month, you might want to finance or even pay cash instead so at the end of the term you own the Lincoln.
Buying a Lincoln
Most people who purchase a Lincoln do so with a combination of their own cash payment with the remainder covered by financing. You are offered an interest rate based on your credit and a term in which you must pay back the loan. Once the loan has been paid off, the Lincoln is yours to continue driving, or trade-in on a new Lincoln, perhaps using the value of your car as the down payment. There is also the opportunity to refinance the loan should interest rates drop.
Benefits of Leasing a Lincoln
When leasing a car, the payments can be lower than if you were to finance a car. This can allow you to purchase the exact Lincoln model and options you desire at a lower monthly payment than it you purchased the same Lincoln.
Most leased cars are covered under the manufacturer’s warranty for most repairs, however, you should keep a record of routine maintenance performed, which is your responsibility to maintain per the owner’s manual.
Benefits of Buying a Lincoln
Many people are under the mistaken impression that if they finance a car that the credit provider “owns” the car until it’s paid off. That’s not true. Much as when you purchase a home, you own the home but the bank holds the deed in collateral.
One advantage to financing a Lincoln is that, if this is your goal, with each payment you are closer to owning the vehicle outright. And of course you can sell the vehicle at any time. You’ll have to pay off the balance left on the vehicle, if there is one, and the remainder goes straight to your pocket.
Drawbacks of Leasing
For those individuals who have leased a vehicle and were displeased with the outcome are almost always those who underestimated the miles they drove each year. It’s important to be honest with yourself about your driving habits, as well as understate the penalty for incremental miles.
The mileage limitation is not been instituted simply to charge customers more – in fact, it’s very much the opposite. The dealership wants you to end your lease on a positive note so that you lease or purchase another vehicle from them. And the reason for the mileage limitations is to lower the customer’s cost. A low-mileage two-year-old Lincoln is worth more, so the value at the end of the lease is higher, which means a lower payment for you.
If you are someone who plans of driving a great deal over the term of the lease, it’s better to discuss that with the dealer right up front. There may be an option for a higher mileage lease or it may be financially advantageous to purchase the vehicle.
It's important to note that if you wish to terminate your lease early, you could face a fee to do so. It’s best to discuss first with your dealer who might be able to offer alternatives.
Drawbacks of Financing a Car
According to Bloomberg, the average term for a new car loan is 70 months (almost six years). If you opt to finance over a longer period of time make certain you have a competitive interest rate.
The value of cars depreciates over time but unlike a home loan, they’re not front-loaded. That means at any point when the balance of your loan is lower than the value of the car you can trade it in or sell it outright.
Another difference between leasing and buying is that with a lease if once you’ve been approved you can often just sign on the line and drive away. If you purchase a vehicle the company providing the financing will typically request a down payment be made.