As with any financial decision, the choice to lease or buy your next car is solely dependent on what you need to fit your lifestyle. Both buying and leasing have perks and pitfalls, so let’s weigh the options to see which choice is right for you.
Buying is a process that is readily understood by the first-time car consumer. You want the car, they sell the car, you buy the car. Easy, right? The car you purchase is yours to own until the day you choose to sell it. Ownership can be very economical, with the reward of resale value at the end of your run. With any luck, you’ll be driving the same car for years to come.
But this model doesn’t fit everyone’s tastes. After three years of ownership, the ride can get stale. Wouldn’t it be nice to have a brand new car again? The technology and style of cars changes so quickly, it’s tempting to trade in that purchased car for the latest model. That can be a difficult choice if you’ve already put a hefty down-payment on a purchased car.
With leasing, a new car can be had every few years, giving you the option of driving the latest and greatest the automotive industry has to offer, time and time again. Leasing can avoid the pain of scraping together the down payment for a new car, or hassling over the resale value of your current vehicle. With a lease, you can often get a better equipped car with more bells and whistles than you could buy outright. Down payments on leased cars are usually low.
However, just like buying a car, leasing isn’t perfect. Interest rates on leased cars are often higher than those of equivalent loans, so you’ll be paying more per time spent driving the car, even though lease payments tend to be lower per-month. There will also be limited mileage on your car, with a lease allowing an average of just 13,000 miles per year. Limited mileage can be a source of stress, as you tally up your distance every day. Overage miles typically cost from 10 to 25 cents each.
Ask yourself what you want out of a car as you consider the pros and cons of leasing and buying. Each is a good option, depending on the demands of your lifestyle.