Pros and Cons of leasing vs buying a car
One of the most important things that you need to consider when figuring out whether it is a better idea to lease a car or to buy a car is to first establish whether you are a long-term person or a short-term person.
A long-term person is someone who buys a car with the intention of keeping it for five years, or potentially even longer than that, even until the wheels fall off.
A short-term person on the other hand is someone who switches their car every few years either because they just do not like to drive the same car for too long, or they do not like to deal with the same look and feel of the car.
Now, it is very important to be honest with yourself and know exactly what type of buyer you are because there are plenty of people who buy a car thinking that they are going to hold on to it for a very long time, (say 10 years) only to trade it in 3 to 4 years down the road and end up losing a lot of money.
When you buy a car only to trade it in a few years down the road, there is a definite chance the value of the car will depreciate over the years. Since a car is an expense and not an investment, it would not be able to make profits for you like other expenses such as real estate.
With leasing private auto, however, you are making payments on a portion of the total price of the car, which means that you do get lower payments, But, it also means that you are left with a residual value (based on its fair market value) at the end of a car leasing deal. Now, you can either pay for that residual value if you want to keep the car, or you can just return the car back to the dealership and then start the process of leasing a different car all over again.
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