There is always debate as to whether or not you should buy or lease your next car. Personally, I would only buy a car simply because I keep my vehicles for a long period of time. Because of this, it costs me less in the long run to simply buy instead of lease. But you on the other hand, might be more interested in a new car every few years or maybe having lower monthly payments. In the end, it all comes down to your goals. Below are the pros and cons of both buying and leasing a car.
Buying And Leasing A Car – What You Need To Know
The Advantages of Buying A Car
- Drive without worrying about how many miles you put on the car
- Get a lower insurance premium since it is less to insure your own versus a leased vehicle
- Own it for the long-term
- Sell it/get back some of the money you paid for it
- Not having to worry about its condition
- Customizing it
The Disadvantages of Buying A Car
- Down payment
- Repair bills
- Higher monthly payment
- Potential to be “upside down” if you take out a long loan
The Advantages of Leasing A Car
- Lower monthly payment
- Lower down payment
- No worry with regard to depreciation
- Ability to get a new car, even with bad credit
- A new car often
- Free maintenance (in some cases)
The Disadvantages of Leasing A Car
- Higher insurance premiums
- Payments for as long as you own the car
- Have to watch your miles otherwise pay a penalty
- Fees for wear and tear
As I mentioned at the start, it really comes down to a personal decision. Some people choose to lease simply because they do not want to have to deal with repair bills as the car ages. While this works for them, it wouldn’t work for me.
Before making any decision, be sure to really look into the pros and cons of each and make sure you are comfortable with the downsides to buying or leasing a car. A new vehicle is an expensive item. Take the time to make sure you are doing what is in your best long-term interest.
Readers, is there anything you would add to these lists?
Hi, my name is Jon and I run Compounding Pennies. I’ve been interested in personal finance since high school and love writing and talking about it. You can learn more about me in the Authors section of this site.