Updated April 6, 2016 . AmFam Team
It’s time for you to get a new car, and you’re wondering if you’re better off leasing or buying. We can help. When considering buy vs. lease, creating a pros and cons list can help you decide what’s best for you.
Leasing pros. You may get more for less when it comes to the financing. A loan for a car purchase covers the entire cost of the vehicle while with a lease you only are paying for the depreciation during the lease term, as well as fees. This means that if you only have a small down payment and your trade-in (if you have one) is minimal, you could still afford the payments on your cool, leased set of wheels.
Leasing is also great if you like to have all the new bells and whistles as it’s a cost-effective way to get a new car every couple years. Leasing fans will also tell you that they love being able to walk away at the end and not deal with trade-ins or having to sell a used car.
Leasing cons. If you’re a high mileage driver, you might want to think twice about leasing arrangements, which often involve mileage limits. You could exceed the restrictions and end up paying overage fees when the lease is up.
Also, when you return the car it’s supposed to be returned in original condition, less normal wear and tear. It’s a good idea to carefully read through this portion of your lease agreement to make sure you know what’s considered “normal.” With a lease you have to say goodbye to any equity you would have if you owned the car. While some people like to walk away, others like having a car to use as a bargaining chip for a future purchase.
Buying pros. If you like your car customized, then you’re going to want to buy. Most leases don’t let you pick and choose your features — they might even restrict color choices. If you get attached to your car or hold onto vehicles for a long time, then buying is clearly the way to go — in the end you own the car and all of the equity in it. Playing off the leasing cons list, there are no mileage restrictions, so you can drive all you want. You also control when you get rid of the car. If you decide you don’t like it after a year, there are no early termination fees.
Buying cons. A car depreciates the moment you drive it off the lot. Sadly, a new car is not worth as much the day after you bought it as the day you bought it. Also, you may be required to make a hefty down payment. Monthly car payments are more than lease payments for the same vehicle, too. If you keep the car past the warranty dates, then repair expenses come out of your pocket. And, at the end of it all, some people really don’t want to deal with trying to get rid of an old car.
There’s no right or wrong answer to the leasing vs. buying question, just the right choice for you at this time in your life. Spend the time you need to determine whether leasing or buying is right for you and your growing dreams. You may be able to lease a more luxurious vehicle for less, but you won’t gain much, if any, equity in the car at the end of the lease. And that might be just what you wanted!