Nearly every household in Illinois and Wisconsin has access to a car or light truck. But that doesn’t make every adult a car owner. About a quarter of U.S. drivers lease instead of buy, a figure that has gone up a few points over the last year alone.
As for whether to lease or own, the choice is entirely up to you. Making the right decision requires exploring the long-term costs – and potential financial risks – to determine what it would mean for your wallet, as well as your personal driving needs.
Auto Leasing is Growing – But Less Popular in the Midwest
Some people prefer taking on less of a permanent commitment when it comes to their vehicle. After all, car ownership is a big responsibility. A new vehicle will set you back on average $48,000, according to MoneyGeek, and who has that kind of cash lying around? Still, leasing is slightly less common here in the Midwest, maybe due to our long winters and rough terrain – or just our appetite for long, scenic drives.
When Is Car Ownership Necessary?
The main distinction between owning and leasing a car is that once you buy one, it is entirely yours. This gives you a certain kind of freedom that you might not otherwise have:
- What auto insurance to get
- Where to take it
- How many miles to put on the odometer
- Whether to sell it, and to whom
- How to soup it up
Leasing only gives you temporary ownership, and with some strings attached in terms of destinations and distances. While ownership is not usually necessary, it is usually the preferred option for people with a long-term vision of having a vehicle that they can afford.
Leasing Agreements Have Terms You May Not Like
If you are considering leasing a vehicle, take a close look at the terms and conditions in your lease agreement. Someone else will be calling shots such as who will be responsible for repairs and maintenance. What kind of wear and tear clause does it contain? When the lease is up, the dealer could charge you for the cost of upgrading the brake pads or replacing the tires if that’s what your agreement dictates.
Have someone you trust comb through the contract with you to ensure you understand every detail before signing anything. That will give you time to ask questions and more leeway for negotiating better terms if anything appears unfair or simply unfavorable to you.
Cost Considerations Before Buying a Car
Car shoppers tend to look first and foremost at the monthly payments they will need to make to access a set of wheels. Instead of going with whatever is cheaper, take a longer-term look at the costs and financial responsibility you will have in the coming months or years. Considerations that might inform your decision:
- The full cost of the vehicle, including auto registration fees and taxes. Car payments today can average well over $700/month – less for used and leased vehicles.
- The amortization factor. How much of your initial monthly payments will go toward the interest on your loan? Find out if any additional payments you make can go toward the principal on the loan instead. Since interest is typically based on the principal, doing so could lower the dollar amount you pay over time.
- Are any terms subject to change? You will want to discern whether they could become less favorable in the future.
- What will the cost of insurance be – and how much would it go up?
Do your research so that whatever decision you make is an informed one!
Leasing as a Short-Term Solution
There are a few reasons you or your family might prefer the temporary status of a leased car. If your spouse’s job requires driving for just a few months at a time in a different state, leasing might be a much more pragmatic solution. Other factors that might make leasing appealing:
- Vehicles tend to be newer and therefore more reliable.
- Lower monthly payments could make driving a more expensive car possible.
- Maintenance on newer cars might be less overall.
- There won’t be pressure to sell it.
Let CFSC Auto Services in Illinois & Wisconsin Handle Your Car Needs
Whatever you drive, be sure to have CFSC help you register it properly so you can get your new plates! There will be other routine auto-related tasks, and our CFSC Auto Services in Illinois and Wisconsin are happy to help! We can even replace a lost or stolen license plate or sticker if you need one.
Visit your nearby CFSC Auto Services for more information on our financial and auto services!