Financing or Leasing? What’s the Best Option for Frequent Travellers?


The choice between buying a car, whether it’s through financing or leasing, can be a tricky decision depending on your situation. For frequent travellers, the choice can be even more complex.

We’ll dive into the factors you should consider if you’re someone who spends a lot of time on the road, but first, a quick breakdown of the difference between the two options.

Financing: If you buy or finance a car, it’s all yours, for better or worse. That includes all the equity, as well as any depreciation. You’re free to do whatever you want with your vehicle — drive it as far as you want and where you want, as well as customize or modify it however you see fit.

Leasing information: You don’t own the vehicle, the dealership does. The monthly payments you make are smaller, and you don’t have to make a big down payment. You can trade in your vehicle for a new model every few years; however, you usually face limitations on the mileage you can put on the vehicle.  

With that in mind, let’s examine some of the factors you should consider if you’re a frequent traveller looking at a new set of wheels – financing or leasing? What’s right for you?

Flexibility

If you love to travel, flexibility may be the biggest factor to consider.

Let’s face it, the whole point of living a nomadic lifestyle is to not be tied down by big commitments. Ideally, if you spend a lot of time on the road, you’d like to find a way to live without a car altogether. But for many, that just isn’t an option, and in that case, the most flexible route is likely buying.

The reason is that you can sell or trade it at any time you want. Even if you take a loss on the sale, at least you know you can be free of the commitment at any time.

The same can’t be said of a lease, as those contracts can be difficult and expensive to get out of. Also keep in mind that as the owner of the vehicle, you have more flexibility on how much you can drive it, while most leases limit the mileage you can rack up.

The exception to this would be if you know you need a car for a set period of time, say a few years. For example, say you are saving up for a big trip two or three years away, leasing will tie up less cash and will be more convenient, and when the contract is up, so is your commitment. In this case, it might make more sense for you to lease.

Which brings us to the next factor.

Cash Flow

The amount of money you need to have on hand should also be a factor in your decision.

While owning your vehicle outright is a better investment in the long term, since you own the equity, it also ties up more of your cash in the short term. Not only is a significant downpayment required to buy, but the monthly payments will typically be larger than if you were to lease, leaving you with less cash on hand. Here’s a handy calculator with which you can plug in custom figures to determine your monthly payments. You can also use an auto lease calculator to find out just how much you can save by going that route.

Leases will often have you off the hook for the cost of major repairs as well. While you’ll still need to pay for regular maintenance and any excess wear and tear, the manufacturer’s warranty should cover anything that goes seriously wrong for the duration of the lease.

If you’re buying, you may find yourself faced with an unexpected repair bill that puts a serious cramp in your pending travel plans, such as Prague, perhaps.

Driving For Business

Do you use your vehicle for work? If so, leasing may be the superior option, as you can write off the cost of the lease payment, and possibly fuel and repairs, for tax purposes. This can add up to some serious savings when it comes time to pay the tax man. While you may also be able to write off the cost of fuel when you own your vehicle and use it for work, you’re on your own when it comes to the monthly payments.

Say you are a travel blogger who uses their car to trek around and write about your experiences on the road. Leasing may be the way to go, as you can write off the cost of your vehicle payments since blogging is your job and you need the car to do it.

And if it’s a road trip you’re planning for, be sure to check out our Top 10 Tips to the Ultimate Road Trip.

End of the Road

The bottom line when it comes to questioning financing or leasing is that buying a car is a better investment in the long term than leasing. However, many travellers aren’t worried about the long-term; they’re worried about tomorrow. So depending on your needs, cash flow, and lifestyle, leasing might make the most sense for you.

That said if you don’t want to be locked into a binding contract which not only commits you to a vehicle for a set term but also limits how hard and how far you can drive it, buying might be the better way to go. This also allows you to unburden yourself of your car commitment at any time.

For many travellers, it’s all about freedom to do what you want, when you want, and how you want, making buying a better bet overall.


What say you?
Which way do you lean as a traveller? Financing or Leasing?
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