When an Auto Lease is the Right Choice

In many cases, an auto lease can benefit your financial situation more than purchasing a vehicle. Many people think it is always best to buy the car so they can build up equity. However, over time, ownership is not always the best option. You need to consider closely what you are looking for in the car, how long you intend to own it, what you will use it for and how you financial situation may change during the course of the next few years.

Short Ownership Period

One of the primary reasons to lease a car instead of buying is a short ownership period. If you do not intend on driving the car for very long, then a lease is a good option. Places like Los Angeles and Miami have relatively short standard periods of ownership.

Also, consider the technology of the card and determine how long before it is outdated. If you plan on trading the car in before you get a chance to fully pay off the auto loan and get your use out of it, then leasing is a better option.

Specific Need to Fulfill

You may need to purchase a certain type of vehicle for a very specific reason. For example, you were just transferred to an out-of-state job and now require a four wheel drive vehicle. The same is true if you are attending college, fulfilling an internship, or moving home for a year or two. If you are selecting a car based on the terrain and needs of the city you are living in, buying only makes sense if you will be there for awhile. Buying a large truck, then moving to the city is a financial nightmare.

Financial Situation will Change Drastically

Today, you may only be able to afford a used subcompact sedan. In three years, however, you may have a significantly improved financial situation. Pay attention to your future prospects and determine if you can foresee that you will still require the use of the same car. Determine if you will be happy driving your utility car, or if you will need a family or larger vehicle. Keep in mind that your car will lose value as soon as you drive it off the lot and in order to regain that lost value, you should be able to make good use of the vehicle for a few years. A loan period should not extend past the point where you will no longer require use of the vehicle.

Uncertain of Future Needs

If you don't know what you will need to drive in 2 years, leasing may be right for you. For example, many young families wonder if they will need a minivan. Having more than 2 or 3 children may necessitate this type of large car. Purchasing a vehicle is still the best way to build equity through driving. However, you need to be able to commit to long-term ownership and usage in order to really gain the equity you are seeking.

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