Buying a car is one of the biggest steps you can make in your life, next to graduation, marriage and children of course. But when it comes to buying a car vs. leasing a car, how do you know what is right for you? Below is a list of four things to consider when you are in the market for a new car and cannot decide if you should lease or buy!
- Your monthly “allowance.” When it comes to a car, you need to consider what your pocket and wallet can handle given monthly payments. Leasing a car often means lower monthly payments because you are paying for the car, including the depreciation. So instead of paying for the full vehicle cost for years, you pay less as the cars value depreciates.
- How often you drive. When it comes to leases, they are all different. If you drive a lot (10,000 to 15,000 miles) then you might be paying extra for each mile. In the end, you may be paying more money in mileage fees based on what your contract says. Negotiate up front and pick the right lease for you!
- Wear-and-tear. If you or your family members are prone to providing wear-and-tear to your cars, then leasing may not be for you. Along with extra mileage fees, a leased car can also accumulated wear-and-tear fees based on your agreement. Know your family’s tendencies, and assess if a lease is right for you.
- How flexible are you? If you need flexibility and you do not know how long you will be keeping the car, a lease may not be for you. If you have to cancel a lease early, you will often be faced with large fees, or even the possibility of six more months of payments! If you plan on keeping the car for a long time, it may be cheaper just to buy it because you usually end up saving. Yet on the other hand, if you are intending to only drive the car for a short period of time, then a lease is for you!
In summary, leasing is great for people who like lower payments on a more expensive car and they like to drive a new car every few years. Buying a car is great for those who want to keep the car for an extended period of time without the worry of excess mileage or wear-and-tear and want flexible payment options.
When it comes to leasing or buying a car, it really comes down to your lifestyle and your habits. Think long and deeply about which option may be better for you, ask you friends or family members for advice, or ask your accountant. Keep in mind, “You lease things that depreciate, and you purchase things that appreciate.”
By Talia DiFulvio