Should you lease or buy your next Subaru?
Ask yourself these questions:
- Do you always want the newest, most wonderful thing? For most people, leasing is paying for the luxury of having a new car every three years or so. In fact, it's usually smarter to lease a car if you plan on only keeping it for a few years. If you were the type of person who waited in line for the release of a new smartphone, then getting a lease instead of buying a car is probably best for your affinity for the newer, better, and bigger thing.
- How long do you plan to keep the car? Leases are typically most cost effective for short term solutions. If you lease for ten years, you probably will end up paying significantly more money than if you bought the car outright. However, if you only plan on keeping a car for a few years, leasing is essentially paying for the portion of the car you're going to use up rather than the whole vehicle.
- How stable is your life? Some of us are free spirits -- or maybe just finishing school and not yet sure what we're doing next. Don't lease if there's a chance of your moving and leaving your car behind, because early termination of a lease can mean hefty fees.
- How much you drive? Mileage limits are a part of leases that can rack up costs quickly, especially if you're not sure how much you'll be driving. If you drive a lot and a lease has a low mileage restriction, it's probably not for you. But if your commute is short and you don't take many long trips, leasing might be a good option.
- Are you a bad driver? Be honest with yourself on this one. If you've had a lot of wrecks or even just ding up your car regularly, a lease is probably a bad idea. While you might not be bothered by a few scratches and scrapes, even small blemishes on the vehicle when you turn it in at the end of your lease can mean fees. Children and pets also should be taken into consideration because if they're hard on the interior, buying a car where you don't have to worry about stains can be a huge stress relief and mean less hidden costs.
- How's your cash flow and savings? Down payments for leases are lower than down payments when buying a car, so if you have less money in savings, a lease might be a good idea. But also consider that with a lease, it'll be up in just a few years and you'll have to put another down payment on another lease or a new vehicle altogether. Get full information from your Subaru dealer, and make your decision based on the cost of the car, payments, insurance, and maintenance costs, balanced with your financial situation.
- Do you want to be tax savvy? If you use your car for work, you can take deductions more readily with a lease than if you bought the car, which is why so many traveling workers lease vehicles. However, if you're trying to build up equity for the future, the tax incentives might not outweigh interest rates in the future, which you miss out on with leases. While it might not seem tax related, equity is important when purchasing a home or taking out loans, which can dramatically affect your taxes. Leases also have lower taxes than buying a car because you're only being taxed on the portion of the car your using rather than the whole value of the car.
- Do you like to customize? Leases often have terms that prevent you from making any changes to the vehicle, down to even bumper stickers. If you want to show your pride in a cause, you'll have to skip out on it with a lease.If you like to put custom work under the hood, you'll be out of luck with a lease.
