Buying vs. Leasing: Pros and Cons
When you decide that it is time to start driving a new model, you are making an important decision on more than what type of car to drive. One of the biggest decisions is whether you should lease or buy your next vehicle. Each option has its pros and cons, and there is no right decision; leasing is best for some drivers while others would be better off buying. Learn about the advantages and disadvantages of each before you decide which route is best for you.
Pros of Buying
The biggest benefit of buying your next car is that you will own it. This means that you can make any modifications you want and don’t have to worry about the necessary wear or tear - you can drive your vehicle however you want. Additionally, you will eventually complete your monthly payments for your car and will be free and clear. Finally, buying a car also lets you get a new one when you want by selling the previous vehicle, although selling a used vehicle can also be a hassle.
Cons of Buying
The most significant disadvantage to buying a car is depreciation. Just the act of driving the vehicle off the lot lowers its price significantly, and the largest depreciation takes place within the first year. In other words, the car you own will be losing value rapidly over time. Additionally, if you own the car, you are responsible for maintenance and damage. That means you will pay out-of-pocket for all regular maintenance and repairs that are not covered by your warranty.
Pros of Leasing
Leasing has a strong financial advantage over buying since it typically requires a lower down payment and lower monthly payments. That is because instead of paying for the entire value, you are just paying for the cost of depreciation. You also don’t have to deal with the loss in value of the vehicle, as you do not own it outright. Leasing is also great for those who frequently like to change their vehicles, as a lease term typically lasts several years. Therefore, you will always have the latest model with the best technology and features on the road. While this is possible with a car you own, it requires additional expenses, unlike leasing a new vehicle and waiting for the lease to expire.
Cons of Leasing
Although monthly payments when leasing a vehicle are lower, you will be paying them for as long as you drive the car. Buying means the payments stop once you have paid off your vehicle, but this never happens when you’re on a lease. Additionally, many companies will charge extra fees for those who use their leased cars more frequently. Therefore, if you put an excessive number of miles on the vehicle or have children or pets, you may find yourself with high fees at the end of the lease contract.
Buyers that need a dedicated workhorse for their job or family may prefer buying rather than leasing, avoiding any additional fees or charges for heavy usage. On the other hand, if you prefer newer vehicle and know that you will not be driving the vehicle longer or more frequently than average, you might prefer a lease. Carefully evaluate the upfront and ongoing costs of any given contract as well as what you expect from your vehicle. Making the right decision can save you time and money in the future.