Like any choice you come across in life, choosing to lease or buy a vehicle comes with its share of pros and cons to either option. Many factors can play a role in deciding which route is best for you, including monthly payment amounts, insurance requirements, mileage limits, depreciation value, etc. It’s not a decision to take lightly as either way you are entering into a contract. Let’s look at the pros and cons of each option.
The benefits to leasing a vehicle are many. One example is you will have a lower monthly payment. Since you would only be paying for the depreciation of the vehicle (which is only a portion of the total sticker value of the car) the payments are much lower than if you purchased that said vehicle. Another benefit would be the option of a brand-new vehicle after your two- or three-year lease. You can stay ahead with the newest safety and technology features. If it sounds good so far make sure to weigh in the fact that you will most likely need higher insurance limits. Most leasing companies will require much higher limits of liability than just what the state of Florida requires which would make your insurance payments higher. Usually when leasing a vehicle, you must carry, in addition to the state requirements, Bodily Injury coverage of $100,000 per person and $300,000 each accident, Property Damage of $50,000 and Comprehensive/Collision coverage with a $500 deductible. The state of Florida only requires Property Damage of $10,000 and Personal Injury Protection. You might also want to factor in that if God forbid something happens, you don’t hold any equity in the vehicle you lease and therefore you do not own anything at the end of your term. You also need to watch the miles that you put on the leased vehicle — most are between 10,000 to 15,000 a year and you pay for each mile you go over that limit.
The benefits of buying are obvious. For one, every payment goes to paying off the vehicle — and the payments will eventually end. At the end of your loan, you will own the vehicle and the equity you’ve built up which yours to do with what you want. Another benefit is you can trade in or sell your vehicle at any time during your loan most times without any penalty. You also are not required to have as much insurance coverage as if you leased a vehicle — a great way to keep your insurance monthly payment down. When financing a vehicle to own the banks usually require, in addition to the state requirements, Comprehensive/Collision coverage with either a $500 or $1,000 deductible — much less coverage required than if you lease a vehicle. On the flip side, a con to buying can be immediate depreciation. If you buy a car brand new off the lot, once you drive off with that car it can depreciate thousands of dollars right away. Also, your monthly payment is higher since you are paying off the total value of the vehicle plus taxes, dealer fees, and registration fees.
Depending on your situation either option can work for you. It’s all how whether leasing or buying would fit into your lifestyle. Some prefer the newest options and lower payments and don’t mind the endless cycle of payments to lease vehicles and some prefer to build equity and stick with one vehicle for years. We here at Cover All Insurance hope that we shed some light onto this topic for you. If you have any questions, concerns, or would like any insurance quotes for a leased, financed, or owned vehicle please contact us at 954-981-4455! We would be more than happy to assist you with your insurance needs.