Kimiko Kidd
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Is Buying Better Than Leasing?

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If you’re shopping for a new vehicle, you’ll have to decide whether leasing or financing is the right choice for your financial situation. While every driver’s needs are different, here’s a look at the benefits and drawbacks of each option.


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Buying

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Benefits of buying

  • Equity: With buying, your money actually goes towards purchasing the vehicle instead of paying for its depreciation, as with a lease. When it’s time to move on to your next vehicle, you can sell or trade in your purchased model and apply the value towards your next car.
  • A long-term relationship: You can keep a purchased vehicle as long as you’d like, and even pass it down to friends or family members. You can also sell the vehicle whenever you’d like, even if you haven’t paid it off yet. A lease, on the other hand, is an agreement that typically lasts about 36 months, with costly fees if you end the lease early.
  • More money upfront: In most cases, when you finance a vehicle, you’ll have to have enough money to make a solid down payment. Whether you lease or buy, you’ll still have to pay registration, taxes, and miscellaneous fees.
  • Perfect for adventure: If you have a long commute or enjoy taking road trips, buying is probably the ideal choice for you. Purchased vehicles don’t have mileage limitations, and you won’t be penalized for causing excessive wear and tear on your vehicle. However, you may get a lower trade-in value or selling price when it’s time to part ways with your vehicle.
  • Expressing yourself: When you purchase your vehicle, you’re free to make it yours. If you’ve always wanted a custom paint job or an engine swap, you’re free to have that done on a car you own.

Drawbacks of buying

  • More money every month: Since you’re making payments towards owning the vehicle, you’ll have bigger monthly payments than with a lease.
  • When it’s time to say goodbye: When it’s time to part with a purchased car, you’ll either have to shop around for a good trade-in deal, or find a buyer on your own. This can be a bit of a hassle when compared to a lease. You can simply return the leased vehicle to the dealership when the term is up.
  • You’re on the hook for repairs: With a lease, you’ll be able to purchase a maintenance package that covers your car’s basic needs. When you purchase a vehicle, it’s a different story. If you need repairs that fall outside of the scope of your car’s warranty, you’ll have to pay directly to have the necessary parts repaired or replaced. However, depending on your car care skills, this could work out to be cheaper than paying for a maintenance package in your lease agreement.

Leasing

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Benefits of leasing

  • Lower payments: When you lease a vehicle, you’re basically making payments on its depreciation. As a result, you’ll end up paying less than you would have if you financed the vehicle.
  • Easy upgrades: If you like to drive the latest models, leasing fits your lifestyle. Most lease terms last about 36 months. When you return the vehicle, you’ll have a chance to lease a newer model. In other words, leases are ideal for drivers who want to experience the latest tech and comfort features without huge monthly payments.
  • Low maintenance: You can purchase a pre-paid maintenance plan with your lease. This will allow you to bring your car in for regular inspections and care. It covers typical vehicle needs, like tire maintenance, oil changes, and wiper blade replacements. However, it won’t cover damage incurred by an accident.

Drawbacks of leasing

  • Customization: Since your leased vehicle is still the property of the dealership, your freedom to customize it will be extremely limited. If you like to put your own spin on a vehicle, leasing isn’t for you.
  • Long-distance driving: If you crave adventures out on the open road, a lease probably isn’t for you. Leases come with mileage limitations from 12,000-15,000 miles, and you’ll have to pay extra if you exceed these restrictions. Furthermore, leases typically hold you responsible for “excessive wear and tear,” so if you’re looking to use your vehicle for anything rough and tumble, consider purchasing instead of leasing.
  • No equity: While your lease payments will be lower than a car payment for a financed vehicle, you won’t get any of that back. When your lease is up, you return the car to the dealer and pay any fees associated with violating the lease agreement, such as exceeding the mileage limit. You won’t get to trade in the vehicle and apply its value towards your next vehicle.
  • Early cancellation fees: If you need to get out of your lease agreement before the term ends, you’ll have to pay extra for the convenience. According to Consumer Reports, this fee can be as pricy as simply continuing the lease. With a financed vehicle, you can simply sell your car before you’ve paid it off, which will also typically result in some degree of financial loss due to depreciation.
  • Option to purchase: After your lease term comes to an end, instead of returning your vehicle to the dealership, you’ll have the choice of purchasing it. While this isn’t necessarily a perk or drawback of leasing itself, it’s a factor to remember when you sign the lease contract. If you get attached to your vehicles, consider skipping the complications of a lease and simply financing your vehicle.

For more information, check out our other articles on leasing.


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