Lease Vs. Buy a Car: Deciding as College Students & Bad Credit Individuals

The decision to purchase a new car is a big and important decision; whether you are purchasing a new vehicle to move to the college, starting off with your first job or expanding your family. As the upfront cost of purchasing a new car is high, it is always a good idea to explore your options. You may either opt to lease a car or buy a vehicle. Leasing a car may provide you with the option of low monthly payments, however, leasing is not for everyone and may not suit every financial situation. Therefore, if you are a college student who is just starting out or a bad credit buyer, read on to understand the different nuances of leasing vs. buying a car.

Need a Car: Is Leasing the Right Option for You?

The following points will help you decide if you should lease or buy a car when you make your next purchase.

1. Long-Term Benefits

Many people focus on monthly payments instead of the total cost of the car. The option of leasing a car seems inexpensive in the short-term due to low down payment amount and affordable monthly payments. However, if you consider the long-term perspective, you may be liable to pay charges such as excess wear charge, charges for exceeding certain miles, late charges, etc. On the other hand, buying a car is a cheaper option as you pay a good down payment amount in the beginning and are liable to only make monthly payments without any hidden charges. From the cost-effectiveness angle for a college going student, purchasing a car seems like a sensible decision because you get to keep the car as long as you want. On the other hand, leasing a car involves paying a steep depreciation cost every time you lease a newer model.

2. Personal Choice & Customization

The personal choice of driving a car and customizing it according to your requirements gets eliminated when you opt for leasing. Leasing a car means choosing a vehicle from the options available with the leasing company. Alternatively, if you buy a car, you not only get to choose your favorite car model, make and year, but you also get to customize your car according to the design in your mind. When you set out to purchase a new car for college, you can opt for an older model in order to gain maximum rebates. The same option becomes non-existent while leasing a car. Therefore, purchasing your own car gives you better option than leasing a car.

3. Stringent Approval Process

A person who is suffering from bad credit history will have a tough time getting approved for a leased car. Majority of the leasing companies require you to have a spotless credit score and stable source of income. If your financial condition is strong, only then you will get to enjoy a lease agreement with the benefit of zero down payment or low interest rates. For instance, if you have a credit score of 680 or lower, your credit score is considered sub-prime and it will result in a higher interest rate while leasing. However, while buying a car, if you are willing to make a hefty down payment and find a co-signer, you can qualify for an affordable auto loan. Even in worst cases, many dealers can help you with bad credit auto loans.

Lease Less, Buy More

As for different financial situations of young individuals or those who have a bad credit history, purchasing a car fits the bill and seems like the sensible choice. Remember to clear your past payments, get a valid co-signer with a good credit score, look for shorter auto loans terms and put good amount of money down. Once you know that purchasing is the right way to go about it, you can start to get the customized car of your choice ready.