Leasing Versus Buying a Car
The countdown for closing out 2017 has begun! This is a time where many of you may be looking for some new shiny wheels. Especially, as any TV watcher can tell you, there are ads for leasing and purchasing a car with bargain prices and closeouts on 2017 models. I often get the question….Is it better to buy or lease a car? The answer is….It depends. Here are some tips as you weigh your options.
Generally, you have lower monthly payments since leasing requires a low or no down payment.
You can drive a nicer car for less money and are generally under warranty for the lease term.
You are able to transition to a new car every 2-3 years.
You don’t own the car. You are basically renting it although you generally have the option to purchase at the end of the lease.
Your mileage is typically limited. If you tend to put on a lot of mileage, leasing can cost you a lot of extra money.
Be mindful of excessive wear and tear charges.
Leasing over a long period of time may cost more money than owning.
You can modify the car as you please.
You may save more money over the long term.
You can drive as much as you want.
You can sell the car and/or use it for a trade-in on the next car you buy.
If you buy an electric or hybrid car, you may qualify for tax credits. Tax credits vary significantly so make sure you do your homework.
You generally have to make a larger down payment if you are financing the car.
Monthly car payments may be higher than lease payments.
You have more of your cash tied up in a depreciating asset.
Once the car is out of warranty, you are responsible for repairs.
In the end, your decision will come down to your lifestyle and driving needs as well as your monthly budget for car payments.