Leasing vs. Buying a Car: What’s Right for You?
September 25, 2017
Leasing vs. buying a car
Your vehicle is one of the most important things that you use on a daily basis. Whether it’s driving to work, picking up kids, or meeting up with friends, your car is usually what gets you there.
Unfortunately, cars also cost money.
However, paying cash or taking out a loan aren’t the only options that you have these days. While cars at one point were leased primarily by corporate customers and luxury automobile enthusiasts in the past, nearly everyone can lease a car now at prices that make buying a car almost look puzzling.
So, let’s take a closer look at leasing vs. buying a car to help you determine which option is right for you.
The Pros of Leasing a Car
Many people aren’t sure why they would lease, over buying a car. It could be due to dealerships pushing the sale of cars – since that’s where they make the most money. There are many benefits to leasing a car, and here are just a few:
- You usually pay much less in monthly payments (often with no down payment).
- You’re able to drive a nicer car than you would if you were buying the car.
- Since you’re under the car’s factory warranty, you pay less money in maintenance fees. It’s also easier to get your car fixed since you’ll have designated shops to which you can take your vehicle.
- You’re able to drive a different car every two or three years, depending on your lease arrangement.
- You spend less money on sales tax than if you were to purchase a car.
- It’s an easy process to transition from one leased car to another.
Although there are many benefits of leasing a car, there are drawbacks – depending on your lifestyle.
The Cons of Leasing a Car
Unfortunately, leasing a car isn’t always as straightforward as some people make it seem. Some of the cons of leasing a car that you mind find are:
- You do not own any of the car at the end of your lease agreement.
- Although you may purchase the car at the end of your lease agreement, The amount that you can drive during your lease is limited. A typical lease agreement limits your driving to around 12,000 miles per year with the option of purchasing more. That could mean fewer road trips.
- Lease agreements can be complicated for the average person to understand for the first-time leaser.
- In some cases, leasing a car can end up being a bit more expensive than purchasing a car since you’re continuously making payments.
- You can’t make a mess of your vehicle. Depending on the condition in which you leave your car, you could be responsible for extra fees.
- If you decide that you need to terminate your lease agreement early, it’s going to cost you a decent chunk of money.
If you’re still unsure about whether leasing a car is right for you, it helps to look at what purchasing a car can do for you.
The Pros of Purchasing a Car
While it may seem a bit expensive or out of reach for some people, purchasing a car doesn’t have to be a burden. If you do decide to buy your vehicle, you’ll find that these are some of the primary benefits:
- When you own your car, you can modify and change it as you please. You can add speakers, paint your car, and make other upgrades that you can’t make in some cases when leasing a vehicle – or will cost you more money than usual to make those changes.
- If you own your car, nobody can restrict the amount of miles that you drive. You’re free to drive coast to coast as many times as you like.
- If you change your mind about your car, it’s no problem. You can sell it whenever you want – but hopefully you’ve paid it off first. Otherwise, this is no longer a pro of purchasing.
- If you decide to purchase a different car, you can always use your current car as a trade-in.
However, before setting off to buy your car, there are some drawbacks to purchasing as well.
The Cons of Purchasing a Car
Although the allure of buying a car can be quite strong, knowing the full story can save you a lot of money and headache in the long run. Some of the more common cons of purchasing a car are:
- When you lease a car, you’re paying the company the amount of value the car is going to lose over your lease term. In the end, it doesn’t matter to you if the car isn’t worth what the company thought it was going to be. When you buy, you can end up owing more on your loan than the car is worth.
- Your monthly car payment is likely going to be higher than a monthly lease payment.
- After your warranty expires (if you even have one), you’re responsible for paying all maintenance costs.
- You have more of your money tied up in your vehicle if you purchase it.
- Loan terms can stretch out for up to eight years, which can start to feel more like mortgage payments than car payments. With those long loan terms, interest has more time to build up (interest rates are also higher due to the riskier nature of long-term loans).
- When you decide to get a new car, you’re responsible for listing it and selling it or dealing with the trade-in.
When trying to determine whether leasing or buying a car is right for you, there’s not one answer that works for every situation. Potential buyers need to thoroughly examine both the pros and cons of leasing and buying a car to determine what options best suits their circumstances.
The most important thing is to take an honest look at your budget, your lifestyle, your credit history, and your needs before making a choice.
There are a lot of great resources on the internet to help you find the best deals on cars, calculate your loan costs over the entire term, and form a budget to make sure that you get the best possible option without breaking the bank.
Use our calculator on the vehicle-specific pages and see your leasing options instantly.