Planning to buy a new vehicle? There are two ways in which you could do this, either cash or buy it on lease. Cash would mean that you would have to pay all the amount up front while making the purchase where as lease would mean that you would have to pay regular installments every month till the period of your lease expires. This mean that you could lease your car for up to 3 or 5 years and pay monthly installments for it if you cant afford the whole price of the car upfront. This might sound easier than paying the full amount, however, this isn’t the case. There are various hidden charges that would come up at the end when you would in the process of finishing your lease.

As mentioned earlier by the time you are about to close on your lease, you might be hit with high wear and tear charges this means they might charge you for the depreciated value of the car. Apart from this you might also be charged with an administration fees since the dealer would have to do all the calculations for you, hence they might charge you a high price for this. If you wish to terminate your lease in the middle of your agreement then there will be a termination charge to it as well.

Besides all these hidden charges, you would also be paying for the highest depreciation years of a vehicle. You’ll also have no equity built up as you do not own the vehicle. Buying a new car on lease would be more expensive than compared to buying a used vehicle. This is because it will spare you the highest depreciation years as at some point your loan won’t be worth more than your car.

You’ll still have some warranty and the price, and therefore payments, would be less. With the money saved, you’ll be able to fix any problems after the warranty expires and still come out ahead. Since you would own the vehicle after some period, you might as well keep it for a longer time. This would save you even more money than changing your ca every three or four years.

Hence paying cash up front might be a better idea for buying a new car than leasing it, as with lease, many costs also come along which make it very expensive to purchase the car.

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