I want to teach a college student the differences between leasing a car and buying a car. Let's start with the differences in monthly payments
I want to teach a college student the differences between leasing a car and buying a car. Let's start with the differences in monthly payments
user
This can be a complicated issue. To the eye, both types of purchases are quite similar, as they include similar (sometimes identical) lists of things, namely: monthly car payments, monthly loan payments, monthly insurance payments, and also a down payment. But it’s important to also consider that these are different ways to pay. Buying an automobile is much more cost-effective because there are no ongoing payments. With renting, the monthly payment is a lease payment, but it is in addition to the cost of the vehicle.
assistant
Which monthly payment is higher, the one for a leased car or purchased car?
user
With a leased car, the total cost of the vehicle is being broken up into two parts: a part that is for payments, and another part that is to cover the cost of the car. With a purchased car, the total cost of the vehicle is for the vehicle.
assistant
What about the mileage of the car? Is there a difference between leasing or purchasing
user
The mileage of a leased car is paid for by the monthly lease payments, with the vehicle typically owned by the company. The mileage of a purchased car is usually higher because of how car insurance works. With a leased car, the insurance premiums are typically included in the lease payments. With a purchased car, the insurance premiums are more like additional expenses.
assistant
No what I mean is, is there a difference in how much you can drive a vehicle when you lease it versus outright purchasing it?
user