Which is best, to lease or buy a car?

The correct answer for your situation can’t be generalized because it depends on your individual needs and circumstances.

There are several advantages and disadvantages to both leasing and buying. It is important that you carefully assess your needs and your financial situation before making a decision.

Assess Your Needs

When making a decision to buy or lease a car, start by evaluating your needs. Review your budget and calculate how much you can afford to pay every month The following questions will guide you in evaluating your situation:

  • Do you have enough money for making a down payment?

  • Is the car you want to drive too expensive for your budget?

  • Are you looking for a car with a very low monthly payment?

  • How often do you replace your car?

  • What are your driving habits?

  • Do you intend to use your car for long distance trips?

  • Do you worry about the resale value of your car?

  • Do you trust the company where you will be leasing the car?

Once you’ve answered these questions, take a look at the pros and cons of leasing and buying a car.

Pros Of Leasing

Leasing is simply a way to rent a car. Many consumers lease vehicles they otherwise could not afford to buy. Let’s take a look at some of the pros of leasing a car:

  • Leasing a car gives you the luxury of driving a new and different car model every few years when your lease term ends.

  • You don’t need to worry about major car repairs since the leased vehicle will remain under warranty by the leasing company.

  • In some instances, the monthly car leasing payment is cheaper than the monthly loan payments for buying a new car.

  • The sales tax you pay for leasing will be low compared to buying a new car.
     

Cons Of Leasing

Leasing isn’t all good news though. Here are some of the downsides:

  • In some markets, leasing is more expensive and the initial payments are high. In this case, you need to shop around to get the best deal.

  • The cost to pre-terminate the lease can be very expensive. Before you lease a car, make sure you can afford the payments over the term of the arrangement.

  • There are mileage restrictions in car leasing. Therefore, if you regularly drive long distances that exceed the mileage limit then you will end up paying more for your lease.

  • You cannot modify or change the car to suit your personal needs since you don’t actually own it.
     

Pros And Cons Of Buying A Car

  • If you can afford to buy a car outright, it’s usually a good idea. The Lease vs. Buy Car Calculator will help you make the best decision for your individual circumstances.

  • Financing a car may require a large down payment – including the debt to go along with it. Because many consumers use a 60-month loan term you have the advantage of owning your car without payments after 5 years.

  • Your driving habits are another factor – if you drive more than 12,000 to 15,000 miles per year it may be best to buy a car because the higher mileage will increase the cost of a lease.

  • One major disadvantage of buying a car is you’ll have to shoulder the cost of major repairs when they are needed. Another disadvantage is depreciation – the decreasing value of your car over time.

  • If you don’t mind owning a vehicle for a long period of time, buying is advantageous – much like owning a home. If you prefer driving new cars with low mileage every year then leasing can be advantageous.

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