A car is a necessity for many college students. It’s not always possible for students to survive in a college town without a car, even if they live on or very close to campus. Public transportation is usually abundant in college towns, but it’s not always an option for those who still live at home with their parents or who live and/or work off-campus. It’s also questionable for those who already have student loan debt. It’s easier to have a car of your own so you can get where you need to go when you need to go, but it’s also ideal to have a car without a payment. Making payments on a car while in college only increases your need to work hard and spend less time studying. However, sometimes it’s not an option. When you must have a car with a payment, you might find yourself wondering if a leased car is right or if you should finance your car. Here are a few considerations to make.
Create A Budget
Don’t make any financial decisions without first establishing your budget. What can you afford? This might be the catalyst that helps you find the right solution. Most lease deals require you put down a significant down payment to keep your payment low. Can you afford to make that down payment? While it’s advisable you do make a down payment when you buy a car, it’s not a requirement. If you don’t have that kind of money just lying around, it’s probably the best option to just buy.
Consider Your Driving Habits
Do you drive a lot? Do you live 45 miles from campus with your parents and commute? If you put serious miles on your car, leasing is not a great option. There are mileage limits for all leased vehicles. While it’s possible to purchase more miles upfront, it’s expensive. This makes the car less affordable before you even drive it off the lot, and it’s going to mean you pay more at the end of your lease if you go over your mileage. On the flip side, if you live 2 miles from campus, from work, and from everything else you do regularly, you might be able to get away with a car that requires keeping the mileage low.
What Payment Can You Afford?
When creating your budget, this is required. This helps you determine your best options. Lease payments can be very low for specific cars if you’re a well-qualified buyer with excellent credit. If you don’t have great credit, your payment isn’t going to be as low. If you don’t have great credit, you might be limited to what you can afford to buy, too. This could mean buying an older car with more miles, and one that’s less reliable.
When this is the case, you should do your homework to find out what you qualify for, how much you’ll be making in monthly payments, and what type of car you might be able to drive if you lease versus buy. This can help you make a decision regarding the road you take when shopping for a new car.
Learn the Pros and Cons
Leasing means getting a new car. It also means most of your maintenance is taken care of for the life of your lease. Buying means you might need a used car. You’re also responsible for most of the repairs and issues you have if the warranties are up. Can you afford this? Sometimes you might take a slightly higher payment to drive a newer car with warranties on things that might go wrong. Know the pros and cons of each, and make your decision based on that information.
The best solution for college students is to do what’s right for their own financial situation. There is no right or wrong answer regarding leasing or buying a car. You must keep your own personal finances in mind, but you can make a decision on your own. Leasing is usually considered a less desirable way to buy a car, but it works well for many people across the country. Take into consideration your finances and go from there.