Friday, September 10, 2010

Leasing VS Buying Part 4

Now for the last part of our little series about leasing or buying - GAP coverage. 

Gap coverage is a very important part to consider when you lease or buy a vehicle. Also called gap insurance, gap coverage pays the difference between the amount you actually owe on your lease or loan, and what your vehicle will be worth if it is destroyed in an accident or is stolen. The majority of car leases have gap coverage built in, but car loans rarely do. 

Without gap coverage, you can end up owing more on your lease or loan than you car is worth. With long-term loans and leases as well as refinanced loans, rolled-over loans, and small or no down payments, being "upside-down" is not uncommon. If you don't have gap coverage you could find yourself owing hundreds or even thousands to your finance company. This is true even if your insurance company has already paid for a car that has been stolen or totaled in an accident. For most who end up caught in this unpleasant situation, this comes as a nasty surprise. 

You're better protected if you get a lease, but if you opt for a loan instead, you can buy gap insurance separately. The trick will be finding it. 

So is it better to buy or to lease? 

Short term you will pay less per month if you lease than if you were to buy. In fact, the monthly payments can be anywhere from 30-60 percent less than if you had a loan, even if you had a 0% or low interest loan. This is great if you have other expenses that need your attention every month. 

Mid-term, leasing costs about the same as buying does when you take into account the fees and finance costs. But this is only true if the buyer resells her car for the resale value right at the end of the loan. If you invest the savings you get every month from leasing however, you will actually pay less than if you were buying. 

Long-term, leasing always costs more than buying does if the buyer keeps his vehicle when the loan ends.   Driving a vehicle after the loan is paid off means the cost is spread over a longer term. It's easy to see, when you take into account finance charges and other fees, that buying a car and driving it for ten years will be cheaper than leasing or buying four or even five cars during the same ten years. If you are concerned about long-term finances, then it's best to buy and keep your car maintained so it will last years. 

Take a look at your lifestyle, budget, and needs before you decide to lease or buy a vehicle. You don't want to waste money, but you also need to be able to afford the car you do have. Hopefully, these articles have helped you understand better the differences between buying and leasing a car.

Let Manly Automotive Group help you in your new and previously owned vehicle choices today stop by our website today and drive away knowing that you made the right choice with us! Manly Auto can also can be found on Twitter and Facebook stop on over and visit us!

1 comment:

  1. I've read all parts of this little series, and I have to say, you provided some good information. I'll be checking out your sites soon.