Do Millenials Prefer Leasing or Buying a Car?

Much has been made of Generation Y’s aversion to debt. They grew up during an interesting time, where they watched the world around them prosper…then fall, hard. Saddled with large amounts of debt incurred by college, they aren’t really looking for more credit liabilities like credit cards or long term loans. But, at the same time, they still need to be mobile. They still need cars. Could this make leasing a more appealing option?

Let’s talk about renting a house or apartment. Generation Y is renting because you get a living space with built in amenities, and maintenance is mostly taken care of by a landlord or management company. Property taxes or costly repairs, like a broken water heater or roof replacement, are in the hands of someone else. Also, there is no need to worry about selling the home when you decide to move; you simply give your 30 days notice and possibly don’t get your security deposit back. Basically, there is no long term obligation. The average mortgage length is 30 years.

Does this sentiment carry over to car buying decisions?

Renting Habits = Car Buying Decisions?

There are several reasons why you need to carefully weigh your options, especially if you think leasing a car is anything like a rental agreement.

  • Vehicle warranties. Whether you have a lease agreement or a purchase contract, warranties cover the same parts of a vehicle. Regular maintenance and issues not covered by a warranty will always be in the hands of the lessee or owner. There is no “landlord” to take care of the flat tire or tune up.
  • Limitations. When you lease a vehicle, you have mileage and wear and tear limits. If you go beyond these set boundaries, you will be paying extra fees at the end of the term. Also, customization, like installing a new sound system or tire rims, will cost you since the dealer will need to undo any changes you’ve made. In an apartment, you simply patch up the holes in the wall where you had your shelves, and paint the walls back to the original colors.
  • There is no easy out from a car lease contract. If you aren’t impressed after a year, and you have two years to go, you will have to pay a lot to get out of it. You can’t just give 30 days notice and walk away without your security deposit. With a financed vehicle, as long as you put a decent size down payment on it, your chances of at least breaking even are far better if you need to part ways with it.
  • Leasing a car is still debt. And you will always have a car payment. With vehicle ownership, you still have potential to go without a car payment for a few years after the car is paid off.

Debt Is Not the End

You may be thinking, “What’s your point?” The point is not everything is a bottomless pit of debt. There is value in having reliable transportation, and the issue isn’t debt, but how you use it. Find a vehicle that is reasonably priced, new or used, and you have the chance to have a reliable vehicle that will last, and have the future potential to use it as a trade in towards another car or recoup some of your money by selling it.

If you’re ready to make your choice, Auto Credit Express is ready to help you find the dealer that can give you the best buying options for your situation. In order to get started, just fill out the online application today.

Posted on January 3, 2015 by in Auto Loans
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