Should You Buy or Lease a Car?



Buy or Lease a Car

There is not a clear-cut answer to the question must you buy or lease a car. It primarily depends on the lifestyle of the customer and the way they prefers to pay for the things they buy. Here are a few pros and cons of leasing and buying a car to help you make a wise decision.

Buying Pros:

  • You become the owner of the car.
  • You do not have to follow any mileage limit and there is no excess mileage penalty on it.
  • You do not need to have a contract on buying.
  • You can change it anytime.
  • You can use it as the trade-in on your next purchase.
  • You can sell the car whenever you want.
  • You can save money in the long run.
  • You can modify the car as you like it.

Buying Cons:

  • You have to pay a huge sum of money at once.
  • The buying requires a huge down payment in the beginning if you do not want to be upside down on loan.
  • Your money is locked in the purchase of the vehicle which depreciates over time.
  • You have to bear the wear and tear costs after the warranty expires.
  • Your monthly car payments are much higher than the lease installments per month.

Leasing Pros:

  • You can transition between new vehicles easily and quickly.
  • You can choose a low or no down payment plan.
  • You do not have to pay a massive sum at once.
  • You can pay a small amount of money in installments every month.
  • You would have to pay fewer sales tax.
  • You would also not need to go the trade-hassles at the end of the trade.
  • You do not have to bear all of the repairing cost because the leased vehicle comes under the warranty of the factory.
  • You can drive the car of your choice for less money thanks to the wide range of leasing offers.

Leasing Cons:

  • You do not become the owner of the car at the end of the lease. However, you can always buy it.
  • Your mileage is fixed in the lease contract. It is usually 12,000 miles a year.
  • You might find it expensive to terminate a lease before time.
  • You might have to pay wear and tear costs at the end of the contract.
  • You might find it difficult to read the lease contract and understand all of the different terminologies.

How to Decide?

The decision of buying or leasing a car depends on the following five critical points:

  1. Monthly Cash Flows: You can lease a car on a low monthly cash flow. However, you need to pay more per month when buying a car.
  2. Available Savings: You can lease a car with low or no down payment plan. However, there is no such option when buying a car.
  3. Your Driving Requirements: You can drive as much as you want in your newly purchased vehicle but you can only go up to 12,000 miles (or whatever the contract says) in a leased car.
  4. Future Value of the Vehicle: If you lease a car, you will have to return it after a year. Therefore, you do not need to worry about its future value.
  5. Your Customizing Needs: If you own a car, you can customize it as much as you want. It might not be possible with a leased car.