Should I Lease or Buy a Car?

Lease car

Should I lease or buy a car? This is a question that many people looking for a new car are asking. Read here to find out the answers you need.

Keyword(s): lease or buy a car

Deciding whether to lease or buy a car is an important choice. It depends on a lot of factors, mostly being your budget, lifestyle, and needs from the car. 

About a third of US consumers lease cars, which is a record high. Is this increasing trend due to a financial advantage or is it need-based?  

And most importantly, is it a wiser financial choice to lease or buy a car? Let's break it down.  

Should You Lease or Buy a Car? The Pros and Cons of Each

Getting a new car is a big commitment. You have to figure out the car that fits your taste, lifestyle, and budget. Once you have a sense of what you like and want, it's important to consider whether you should lease or buy a car.

Leasing Pros:

  • Lower monthly payments
  • Lower (or no) down payment
  • For many, leasing can afford them a nicer car than they could buy
  • You don't have to worry about selling the car when you're done with it, just hand over the keys at the end of your lease
  • You can get a new car every few years
  • Pay less sales tax than buying
  • Standard maintenance is usually taken care of by the warranty for the entire term of the lease

Leasing Cons: 

  • You're paying for the depreciation of the vehicle 
  • You have no equity from the vehicle
  • Your payments carry less value: you have no monetary stake in the vehicle at the end of your lease
  • Usually, there is an annual mileage limit on leased cars, and it's costly to go over that limit
  • Wear and tear fees: if there is any damage to the car or anything about it is different from the way you first acquired it: you'll end up paying extra to return the car to its original condition. 
  • Leases typically are costly to break early

Buying Pros: 

  • Every payment is an investment, providing you with long term savings even if the monthly payments are higher than leasing
  • Use the car as much as you want without worrying about mileage fees racking up
  • Upgrade the car or otherwise modify it as you please
  • Buying provides you with the flexibility to sell the car whenever you choose 
  • Trade-in value can save you a ton when you decide to buy a new car
  • Once you finish making payments to your lender, the car and its equity are yours!

Buying Cons: 

  • Higher down payment and monthly payments
  • You are responsible for all maintenance after warranty
  • you end up paying more sales tax

Conclusion: Lease or Buy a Car?

Buying is a better financial choice in the long-run, if you can keep up with the higher payments. Once you buy your next car, you'll get a big chunk of change back from selling or trading in your car. 

Leasing is a viable option if you don't plan to keep a car for more than a few years, such as if you are in college or temporarily relocating for business and don't drive more than the term mileage in your lease. 

That's it!

Want more? Check out our other helpful blog posts such as, "Find Competitive Vehicle Insurance Rates Online" and "Compare Personal Loans Interest Rates before Applying."

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