Car leasing Q&A: “Leasing vs. buying a car.”
When trying to determine whether it is better to lease or buy a car, you’ll have to consider a number of things.
Perhaps the most important item on your list will be monthly payment.
Lower Monthly Payments
With a car lease, you’ll have lower monthly payments than you would if you choose to buy your car. Of course, there’s no set difference in monthly payment, but it will most certainly be lower.
The big trade-off is that you won’t own your car at lease-end, whereas with a purchase you’ll have ownership in your car and won’t need to go looking for a new car once the lease is up.
With a car lease, the monthly payments never really stop, whereas buying a car has a set number of payments before the car is all yours.
More Shopping with a Car Lease
Along that same line, you’ll be shopping a lot more when you lease a car.
Every three years, or less, if you consider the time it takes to shop, you’ll have to scour the newspaper and Internet for car leasing deals and eventually step foot inside a dealership to negotiate (how to negotiate a car lease?).
Ugh…we all know that’s no fun. And you may have to pay fees to return the car simply for not opting to purchase it.
Then there are excess mileage fees and any fees for dings and dents beyond what the dealer considers reasonable.
No Maintenance Worries
However, if you own your car, you’ll need to deal with eventual repair costs and maintenance, whereas with a car lease, you drive the car during its best years.
That said, a car lease will ideally be free of any major repairs, giving you peace of mind while keeping your budget balanced. Some car companies even pay for scheduled maintenance during your car lease, a nice plus (though many argue it’s just hidden in a higher lease payment).
Drive a New Car
With a car lease, you also get the privilege of driving a new car, which is obviously an advantage to buying a car that could become dated in just a few years, or perhaps before it’s even paid off in full.
If you’re the type of person that likes to drive the hottest new thing, a car lease will probably be your best bet.
Just know that you’re paying for most of the car’s value during the few years you lease the car, so there’s an associated premium.
Of course, there’s less commitment with a car lease, which is certainly an advantage, and you only pay sales tax on the portion of the car’s value that is used during the lease period (car lease residual value).
In summary, there are a number or pros to car leasing and cons to car leasing. Review both and take a hard look at your unique financial situation prior to making a decision.
And hey, perhaps the deal you receive will dictate whether its better to lease or buy.
So be sure to do plenty of shopping, comparing and negotiating before committing to anything!