To lease or to buy? It’s one of the age-old questions car buyers ask themselves. Unfortunately, there’s no one-size-fits-all answer. The option that’s right for you depends on a number of factors, including your financial situation, lifestyle and your future plans for the vehicle.
Before choosing the option that’s best for you, it is important to understand the difference between leasing and buying. When you lease, you basically “rent” the vehicle for a predetermined period of time. Leasing allows you to drive a brand new vehicle with lower monthly payments than if you purchased a car. Typically, lease agreements stipulate a mileage maximum for the lease period. Any additional mileage you put on the vehicle is an extra cost. At the end of your lease, you have the option to return the vehicle or purchase it. Leasing might be right for you if you:
- Like driving a new car every couple years
- Want a low monthly payment
- Find new safety features and options very important
- Always want a car under warranty
- Don’t care about ownership
- Drive a limited number of miles
When you buy a vehicle, you typically make a down payment, pay sales tax and finance the purchase price at an interest rate predetermined by your financial institution or loan company. Over the term of your loan you’ll pay the full cost of the vehicle, and once your loan term is up you own the vehicle. Buying a vehicle might be a good idea if you:
- Can afford higher monthly payments
- Like the idea of ownership
- Don’t want to risk lease-end costs
- Plan on driving the same vehicle for many years
- Don’t mind covering repairs after the warranty expires
- Are a high-mileage driver