When the time comes that you need a new car, you might find yourself wondering whether you should buy or lease. Though each of these options will ultimately lead to you having a new car to drive, they are quite different. Before making the choice between buying and leasing, there are several factors you should consider about each one.
One of the most important things to consider whenever you’re looking at a new car is the cost. As a raw total, leasing a car is always less expensive than actually purchasing it, as the lease period is almost always shorter than the full period of a loan on a brand new car. Initial fees are also substantially lower, making a lease agreement more accessible to someone who may not be able to save up enough money for a down payment, sales tax and all of the other expenses that come with buying a car.
Despite the fact that a lease is less expensive, you should also consider the fact that, at the end of the lease, you won’t actually own your car. Once you purchase a car, it has a certain value as an asset. However, that value can go down drastically over just a few years, meaning that there’s very little advantage, even in terms of asset value, to purchasing a car if you plan on reselling it later on.
Another area related to the overall cost involved with buying vs. leasing is maintenance. Under both lease and purchase agreements, cars will start out under a manufacturer’s warranty. In the case of a lease, however, your lease agreement will almost always expire prior to the end of this warranty. If you purchase a car, you’ll have a limited period of time during which most or all of your maintenance fees will be taken care of, after which they will have to come out of your own pocket. Needless to say, this greatly increases the amount of money you will spend on a car your purchase as opposed to one you lease over the long run.
One area in which purchasing does tend to win out is convenience for people who do large amounts of long-distance travel. With a lease agreement, you’ll have a certain number of miles you can drive each month. After that, a small overage fee will be applied based on your total mileage. If you are in the habit of making long trips between states, this can become a bit troublesome over time. If your longer trips are fairly infrequent, however, this isn’t something you’ll need to worry about too much.
Disposing of the Car
When you purchase a car, it will be yours until you decide to sell it. While this does allow you to retain some value in the vehicle, it also brings up the problem of actually getting rid of it when you’re ready to. Generally, you will have to choose between trading your car in at a dealership, where you won’t get anywhere near its full value, and selling it privately, which can take quite a bit of time. Getting rid of a car also gets harder as it grows older, meaning you could be stuck with it if you wait too long.
With leasing, on the other hand, you simply return the car when the lease agreement expires. Though you don’t keep the car, this system can be very convenient, as it relieves you of the burden of having to sell it. When your lease ends, you can just start another one and have another new car to drive, rather than dealing with disposing of an old and depreciating car.
So, Which is Better?
Whether leasing or buying will be better for you will, to some degree, depend on your personal situation and needs. If you want a car that you can keep for years upon years or if you travel long distances by car on a regular basis, buying may be the better option for you. For most people with more conventional car needs, however, leasing a new car will be more affordable and more convenient than buying one outright.
When making your choice, be sure to thoroughly explore both options and to fully understand the terms of any lease or purchase agreement you consider. Shop around for the best deal, and you’ll likely be able to find a lease agreement that fits your needs and will save you money.