Car commitment: buying vs. leasing

Aug 22, 2019 | Cars

When it’s new-car time, money’s a big factor. So when it comes to buying or leasing, which route is best for you? 

If you plan to develop a long-term, deep, emotional bond with your car, buying is generally considered a better way to go. But if you’re the love-‘em-and-leave-‘em sort, trading up for a newer model every three or four years, leasing could be better for you.

The essential difference between buying and leasing is that those who purchase a vehicle will own it free and clear after their loan is paid off. On the other hand, people who lease their car may enjoy a lower monthly payment, but will have no tangible benefit after their lease expires. Both camps have their pros and cons. Many experts agree that it’s essentially a personal preference whether you’d like to own the car one day or experience the excitement of driving a new vehicle every few years.

So let’s talk shop:

The pros of buying.

  • You own the vehicle after your loan is paid off 
  • Insurance is typically cheaper (fast-and-furious drivers excluded)
  • No constraints on mileage
  • You can modify or equip your car to your liking
  • Sell the car whenever you want

The cons of buying.

  • May require a higher down payment than an initial lease payment
  • Higher monthly loan payments
  • Substantial depreciation costs
  • You’re responsible for repair costs after the warranty expires
  • Possible trade-in or selling hassles down the road 

The pros of leasing.

  • Drive a nicer car for a lower monthly payment
  • Drive a new car every few years
  • No depreciation worries
  • No trade-in or selling hassles
  • Lower or no repair costs — you’re always covered under the vehicle’s factory warranty

The cons of leasing.

  • You don’t own the vehicle (although you’ll have an option to buy after the lease expires)
  • Mileage is typically limited to an average of 12,000 or 15,000 miles annually (you’ll pay for excess mileage)
  • Higher insurance premiums for leased vehicles
  • Possible excessive wear-and-tear charges at the end of the lease (be careful with those chili dogs!)
  • Penalties for early termination of a lease

Other special incentives, such as manufacturer rebates or end-of-year deals, could make buying a more attractive alternative. On the other hand, if you’ll use the vehicle for business, leasing may provide certain tax advantages. Consult your tax adviser for details. 

So… ready to commit?

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