Leasing vs buying a new car | Which is better for you?
This is part of our Car Buyer’s Glossary. series breaking down all the terms you need to know if you’re buying a new or used car from a dealership.
One of the biggest questions auto buyers consider is, should I lease or buy? Here are some tips to figure out which is right for you.
Leasing
Leasing a car is much like leasing an apartment. You sign a contract, to pay a fixed price, to cover a fixed mileage, over a fixed period of time. Your monthly lease payment depends on several factors, including the vehicle’s price and your down payment amount. As a general rule leasing is cheaper per month than buying, all other things being equal. You could also consider a one-pay lease. Paying for the whole lease in one lump sum can save you significant money in fees, but you need to have the cash on hand. It’s not for everyone. Leases are cheaper because you won’t retain any equity. For better or worse, once the lease is up, you’ll simply pay for any damage or mileage overages, then return the vehicle, unless you buyout.
Buying
In contrast, financing to buy a car results in a higher monthly loan payment then leasing, but you’ll eventually own the car outright. You can only lease at the dealer, but you can get auto loans at your local bank or credit union, and you can usually get a better deal. Know your credit score, shop loan rates, and get pre-approved before heading to the dealer. Check out the Autoblog loan calculator to explore your options for loan payments.
So what do I do?
There are pros and cons to both options, so here are a few tips to help make your decision.
Leasing Pros
Leasing may be a good choice if…
You don’t want to put down a large chunk of money
You want a new car frequently
You’re okay with having a car payment
You drive fewer than 15,000 miles per year
You generally keep your cars in good, undamaged condition
You qualified to write off the lease
Buying Pros
Financing to buy a car may be a good choice if…
You can afford a higher monthly payment
You drive a lot
You don’t need a new car very frequently
Your cars tend to acquire a few dings and scratches
You want to stop making payments at some point
With these tips, you should have a much better sense of whether or leasing or buying is the right move for you. Visit Autoblog.com to learn more.
