Ask most people and they'll probably tell you that car buying is the way to go. And from a finance perspective, it's true, provided you're willing to make higher monthly payments, pay off the loan in full and keep the car for a few years. Leasing, on the other hand, can be a less expensive option on a month-to-month basis. It's also good if you're someone who likes to drive a new car every three or four years.
There isn't a clear-cut answer - each scenario has its own set of pros and cons. We say that the decision to lease or buy usually comes down to your lifestyle and how you prefer to pay for things.
For example, if you need an upscale car for business, perhaps to entertain clients, leasing allows you to have a nicer car for less money. It might also provide a good tax write-off. However, if you're someone who tends to stick with the same car for years, the best choice would be to buy a new or used car and keep it for as long as it is reliable. You'll enjoy a few years without a car payment, which is the point of car buying. That's something people often forget.Ultimately, you can say good things about both buying and leasing. Your choice might come down to personal tastes and priorities rather than pure dollars and cents.
Since everyone's situation is different, here are the pros and cons of leasing and the pros and cons of buying. Some of these points are financial factors and others relate to your needs and lifestyle. Keep in mind that there isn't always a perfect answer to the question of whether to lease or buy.
SHOULD I LEASE A VEHICLE?
Leasing Pros:
You typically have lower monthly payments with a low or no down payment.
You can drive a better car for less money.
You have lower repair costs while you are under the vehicle's included factory warranty.
You can more easily transition to a new car every two or three years.
You don't have trade-in hassles at the end of the lease.
You pay less sales tax.
Leasing Cons:
You don't own the car at the end of the lease (although there is always the option to buy).
Your mileage is typically limited to 10K, 12K, or 15K per year unless more is purchased.
You may find lease contracts confusing and filled with unfamiliar terminology.
You may find it costly to terminate a lease early if you're driving needs change.
SHOULD I PURCHASE A VEHICLE?
Buying Pros:
You can modify your car as you please.
You can drive as much as you like. There's no excess mileage penalty.
You are not obligated to have damage repaired.
You have more flexibility since you can sell the car whenever you want.
Buying Cons:
You may have a higher down payment to avoid being upside down in the loan (owing more than the car is worth).
Your monthly car payments are typically higher than lease payments.
You're responsible for repair costs once the warranty expires.
You face possible trade-in or selling hassles when you decide to get your next car.
You'll have more of your cash tied up in a car, which depreciates in value.
SUMMARY
Briefly, leasing makes it easier to get more car for less money. This is because you only pay for the use of the car for two or three years, instead of paying for the vehicle itself. Buying, on the other hand, frees you from the restrictions involved in leasing, such as mileage caps. The car is yours to do with as you wish.
Ultimately, it's up to you to weigh the pros and cons, determine your needs and decide which choice best suits your lifestyle. Have questions on leasing vs. buying? Feel free to contact the team here at McGee Toyota of Claremont to discuss which option is better for you.
