To Lease or to Buy: That is the Question

By Eric Schad

Researching and finding the perfect new car isn’t all that difficult, provided you know what features, amenities, and capabilities you want and need. It’s what comes after that which is the real problem. That question is whether to lease or to buy, and it’s probably the most common question in the automotive realm. If you aren’t sure which way to go, here are some tips to help you decide.

The Pros of Leasing

According to Experian Automotive, one-third of all new vehicle purchases are leases. That isn’t because people aren’t willing to buy. Instead, it’s all about flexibility. When you lease a vehicle, you aren’t on the hook for depreciation, and every two to four years, you can have the latest and best model in your driveway.

Another advantage of leasing a car is that you don’t have to worry about repairs. If anything breaks, the dealership is on the hook for the repairs. In some cases, you can also structure a lease so that even routine checkups are covered by the dealership.

The Cons of Leasing

One of the biggest disadvantages of leasing is that you don’t own anything. Like renting versus buying in the real estate market, leasing is akin to renting. You pay a certain amount every month, yet you walk away with no asset. While you don’t sink huge initial cost into the car, you won’t be able to recoup any money by selling the vehicle at the end of the term.

If you love to customize your vehicle, you also won’t want to lease. The lessor will always want the car back just the same as when you received the keys. Any modifications will cost you extra cash when you bring the vehicle back to the dealer.

The Pros of Buying

Buying a car is an enigma. It has so many variables that it isn’t always easy to tell if it’s the right decision. However, it gives you ownership of a vehicle that you can modify, upgrade, or sell when you want a new ride.

Another awesome feature of buying a car is that you can drive it anywhere for any reason without concern for mileage. Most leased vehicles have mileage maximums each month or year, and going over that total results in substantial penalties. Because you own the car, you can drive from Anchorage to Miami without a hitch.

The Cons of Buying

According to Experian Automotive, 84.5 percent of new vehicles now have some sort of financing or a lien holder. While this isn’t necessarily a negative, it should tell you that looking over your finances before buying is of the the utmost importance. When you buy, you’re on the hook for the monthly payments, repairs, and other costs. If something catastrophic happens to the vehicle, it doesn’t matter. You’re still liable. Plus, once you have the car paid off in its entirety, it’s worth just a fraction of the initial price. You may recoup some of the money, but most of the time, you take a loss.

Now that you know the ins and outs of buying and leasing, you have a true knowledge on which situation is right for you. Understanding is the first part of making the correct decision, and armed with this information, you can walk away knowing you made the perfect choice.