When you think of buying a car, the dilemma you often face is whether you should lease it or buy it. What may be right or wrong for you depends primarily on your current situation and targeted goals. Leasing has increased in popularity over the years, with monthly cost typically being the deciding factor. On the down side, while leasing a car will give you the use of the car during a particular period, buying will give you actual ownership of it. To aid you in reaching a decision, let us consider the pros and cons of both options:
Buying a Car
Advantages
- Eventually, you are the owner of the vehicle and free from the burden of debt associated with financing.
- There are no mileage limitations or associated mileage fees so you can drive the car as far or as long as you wish.
- You may keep your car until the wheels fall off or sell it at will.
- The longer you are able to keep the car, the greater your return on investment.
- You may custom order or adorn the vehicle to your heart’s content.
Disadvantages
- Unless you are buying a used car, your investment depreciates significantly at the time of purchase.
- The down payment is generally higher than a lease yet depends on your credit and trade-in as well as any promotional offers.
- Monthly payments are typically higher without a substantial down payment.
- Once the warranty has expired, repair costs can vary.
Leasing a Car
Advantages
- The lessee is only required to pay the cash due (e.g., a monthly payment and/or sales tax) at the time of signing.
- In the short-term, the monthly payments are less expensive.
- With every new lease, you get to experience the latest and greatest of cars and features.
- If you use the vehicle for business purposes, you may be eligible to deduct your monthly lease payments on your tax return.
- There are no concerns about depreciation or resale values.
Disadvantages
- It’s not yours to keep.
- In the long-term, the monthly payments become more expensive.
- Financing costs are typically higher.
- Like renting an apartment, you must return the car as close to its original condition as possible or face costly charges.
- Fees associated with exceeding mileage limits can add up quickly.
- There is little flexibility to early terminate a lease without incurring substantive outlays.
Ultimately, whether to buy or lease all depends on your needs and lifestyle. So in the end, the choice is yours. Happy shopping!