Lease or Buy

Should You Lease Or Buy?

Should you lease or buy that next vehicle? It really comes down to your routine and preferences.

If you are someone who likes to drive a new car every few years leasing may be the right option. If your career has you entertaining business clients there may be a tax write-off for certain professions. For you if it boils down to money saved there are a number of Auto Loan and Auto Lease Calculators to figure estimated leasing payments and loan payments.

Advantages of Car Leasing

•Lower monthly payments•Lower down payment
•You can drive a “better” car for less money monthly
•Lower repair costs (With a three-year lease, the factory warranty covers most repairs)
•You can more easily drive a new car every two or three years
•No trade-in hassles
•You pay sales tax only on the portion of the car you finance

Disadvantages of Car Leasing

•You don't own the car at the end of the lease
•Your mileage is limited to a set amount, typically 12,000-15,000 miles a year (excess miles are paid for at the lease termination)
•Lease contracts can be confusing
•Leasing is more expensive in the long run (as opposed to buying and driving until the wheels fall off)
•Wear-and-tear charges can add up (paid at lease termination)
•It's costly to terminate a lease early if your driving needs change

Advantages of Car Buying

•Pride of ownership —transform your car as you please
•Car buying is more economical in the long run unless you buy and trade-in regularly
•No penalty for driving excess mileage
•Increased flexibility — you can easily sell the car whenever you want

Disadvantages of Car Buying

•Higher down payment generally
•Higher monthly payments
•You're responsible for maintenance costs once the warranty expires
•Trade-in or selling hassles when you’re ready for a new car
•More of your cash is tied up in a car, which depreciates, rather than an investment that appreciates

As you can see leasing may be a better option in the short term, but in the long run you may want to go with buying.

It is up to you the smart car buyer to weigh the pros and cons for yourself, determine needs, and what best suits your lifestyle.