Lease Car vs Buying: Pros and Cons You Need To Know
You’re in the market for a new car and everyone you know has a different take on what’s the best way to finance it. With so many different variables to consider, there’s no one best way to decide on a lease car vs buying one.
First of all, a car is a big expense.
Whether you own or lease, there’s insurance to buy, fuel, maintenance, and more. For many drivers, a car is one of the most expensive things in their possession.
If it’s time for a new automobile, you may be wondering: should I buy or lease?
The answer is …
It depends. Both leasing and buying have their pros and cons.
If you’re on the fence, keep reading for a closer look at why you might want to lease car vs buying or buy instead of lease.
Buying a Car
There’s just something about owning a car.
The feeling of freedom and self-reliance may be worth the price of admission for many. But, the expenses and long-term commitment could just be too much for some.
Owning a new set of wheels is a very convenient and fun luxury for many people. While the pros may far outweigh the cons for most auto buyers, ownership is not without its downsides.
Pros of Buying a Car
Perhaps the biggest benefit of buying a car is that you own the vehicle. That means you can do what you want with it when you want.
Bored with your new ride after just six months?
Sell it or trade it in.
While selling a car after six months may not be a financially sound idea, it’s up to you if you own the vehicle.
Here are a few more upsides to buying a car:
- Customize the vehicle however you’d like without worrying about repercussions
- Drive as many miles as you want
- Keep the vehicle for many years and really get the most out of your investment
- Sell or trade the car in when you’re ready to upgrade the clunker to a newer model
Cons of Buying a Car
As great as car ownership can be, it does have its downsides. Here’s a few a the negative aspects of buying a vehicle:
- Payments are typically higher than a lease
- The owner must deal with selling or trading in the vehicle when ready to upgrade
- Repair bills could add up as your junker ages and turns into a gas-guzzler
Should You Purchase a Car?
If you value your freedom, plan to modify your vehicle, or just really like to get your money’s worth out of things, then car ownership is probably for you.
You may end up paying a little more up front, but over time the cost of owning an automobile tends to be lower than leasing.
It’s also very important to consider how much you drive. Car leases greatly limit how many miles you can drive each year and will charge penalties if the lessee exceeds the mileage limits. This is obviously a huge downside if you like to travel or need to do a lot of driving for work.
Leasing a Car
If you’re looking for a new car, leasing a vehicle is another popular option that may be able to save you a few dollars month to month. Many lease payments are significantly lower than the typical payments on a purchased, financed vehicle.
Leases also offer the benefit of complete warranty coverage for the full term of the lease car. While warranty coverage can run out quick on a new vehicle, it never expires on a lease.
Pros of Leasing a Car
Here are just a few of the many benefits a leased vehicle offers:
- Monthly payments are up to 60% lower than the average car loan payments
- Full warranty coverage as long as the vehicle is still being leased
- Return lease and drive a new car every few years when the lease is up
- Don’t have to go through the hassle of trading in or selling the car when you’re ready to upgrade
Cons of Leasing a Car
As great as leasing can be for many drivers, it’s not without its downsides.
If you’re thinking about leasing a car as opposed to buying, consider these negatives:
- The car cannot be driven more than a set number of miles, or penalties will be incurred when the lease ends
- Consistent income needed to qualify for a lease
- Maintenance on the lease car must be performed on a strict schedule or you could be penalized
- You’re not left with an asset–however small or large–at the end of lease payments you’re really just renting
- Lease terms can be difficult to get out of without paying steep penalties
- You could be left upside down in the value of the car versus the amount you owe at the end of the lease
- Insurance is often more expensive for leased vehicles than for standard, purchased vehicles
Should You Sign a Lease?
While leasing a car certainly has its benefits, the financial downsides often outweigh the upsides. If you continually lease vehicles, you’ll probably end up paying more in the long run with fees, added maintenance costs, and more costly insurance.
But, if you prefer the freedom and simplicity of a lease, then the added cost may well be worth it.
Making a Decision–Lease Car vs Buying Car
Leasing a car vs buying a car is a big decision. Before you head to the dealer, make sure you know what type of car you want and how you’re planning to pay for it.
Lease car vs buying. That’s the big question.
Both options have their advantages and disadvantages.
If the simple, no hassle process of leasing appeals to you and your budget–go for it. But, if you like the idea of owning and the benefits that come with car ownership, take a look at your financing options and pick a car that’s right for you.
For more on personal finance and making the financial decisions that are right for you, check out some of our other finance articles.
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