Lease vs Buy

Which option is right for you?

When you're in the market for a new car, you will be faced with deciding between buying and leasing. Each option offers certain benefits, and each option comes with certain drawbacks. When you lease a car, you essentially rent it from the dealer. When you buy a car, you make payments to own the vehicle. Buying offers more freedom, but leasing can be cheaper and diminishes hassle. To help you make the best decision, understand the following tips for car buying and leasing.

Lease:

  • If your budget is not comfortable with a large down payment, a lease is a good option. Leases typically require little or no down payment.
  • Search for cars that will have a high residual value, as the more a car will be worth at the end of a lease term, the less money you'll pay per month.
  • A good lease will offer a lease price that is lower than the manufacturer's suggested retail price for the vehicle.
  • Good options for people who will want to drive new cars every few years.
  • Can allow you to get a car that would have been out of your budget if you bought it.
  • Good for people who do not want to be bothered with out-of-warranty maintenance costs.
  • Will typically require lower monthly payments than a car purchased through financing.
  • Mileage in a leased vehicle must be monitored; going over the allotted mileage can cause you to pay expensive overage fees.
  • Must be driven with care; abused vehicles will cause you to be charged for excess wear and tear.
  • Cannot be significantly modified in any way (repainting the car, changing parts, etc.).

Buy:

  • Gives you the freedom to drive without mileage limits.
  • Vehicles can be modified or customized in any way.
  • Make payments to build equity and actually own the vehicle.
  • Although monthly payments may be higher than those for a lease, purchased cars offer the possibility of eventually freeing the the buyer from monthly payments.
  • Must be comfortable with selling/trading-in their used vehicle, once they decide get get a new car.
  • Must be ready to pay for maintenance once, the manufacturer's warranty expires.
  • Buyers should look for an auto loan with very low or no financing interest to save money.

To determine if buying or leasing a car is better for you, you need to give your personal needs and preferences a detailed analysis. Neither option is the right option for everybody, so without taking the time to think about how each option applies to you, you may not make the best decision. Use these tips as a guide for determining which option is the best option for you.