To Buy or To Lease a Car – Which Makes More Sense?

A vehicle is a big investment, one that not only costs to get but also costs to maintain. There are two general choices when it comes to having a vehicle for your transportation needs: buying or leasing. While many people find it inconceivable to fund the lease of a car, other individuals may find that a lease is the perfect option for many reasons.

Lease Argument
As many vehicles have a sticker price between $20-30k, leases are becoming more popular for financial reasons. Leasing a vehicle will likely cost you more money in the long run but up front, it can be an easier financial option for many. When leasing a vehicle, there is typically a smaller cash contribution needed upfront and smaller monthly payments than if you purchased a new car.

The other upside to a leased vehicle is that drivers have access to vehicles that are more luxurious than what they could typically afford with a new vehicle. With a lease, you can trade up to a newer, more modern vehicle with subsequently leases.

There are several downsides to leasing a vehicle however. Many will depend upon the dealer and the feelings of the individual. But some may consider the responsibilities of a leasee to be too constrictive. For one, you typically have a mileage limit for a year in the range of 15,000 miles. Also, the lease holder is usually responsible to keep the car’s condition in top-notch shape. Spills, burns, and damages can cost you additional money.

Purchase Argument
Financing and paying off a vehicle all of of your own can be very satisfying and good for your credit score, provided you can keep up with the payments for the life of the loan. Overall, a purchase will cost you less over time than a lease, even though you may be paying more money for a auto loan on a monthly basis. Purchasing a car means you do not have to be financially responsible to another party should you damage or alter the condition of your vehicle as you would with a lease.

There are also no restrictions on mileage so you won’t have to pay out money for each extra mile you drive. The downside of purchasing a vehicle is the expense, the maintenance charges, and ultimately the fact that you will likely have to drive the same vehicle for years to come, unless you decide to trade in for a new car. Since the expense of most new vehicles is high, most people will end up driving their purchased vehicles for many years, following their final payment.

Make the Choice
Before you ultimately decide if leasing or buying is right for you, you’ll need to do some research. Consult with the car dealer about the varying prices and terms for leasing versus buying the vehicle you are interested. Find out what impact a trade-in of your current vehicle will have on both a lease and a purchase. If you go to the dealership prepared for the task at hand, it is less likely the dealer won’t try to make a lease or a sale on something you can not afford.

Regardless of whether you choose to lease or buy, never extend yourself too far. Know what you can afford to get going into the deal and leave yourself room to negotiate. Just because you can afford more, does not always mean you have to buy or lease yourself to the max.