Should you buy or lease your next car?

Most experts would advise that in the long run buying is more economical than leasing. When you lease a car you are essentially paying for depreciation and financing the difference between what the car cost now, and what it is expected to be worth at the end of the lease—you won’t build equity. 

And, when you turn the car in at the end of the lease you may be responsible for wear and tear or excessive mileage charges. You might want to take this in to consideration if you are chauffeuring kids to and from muddy soccer practices. 

Weigh the Difference

Leasing Advantages:

 

  • No or low down payment
  • Lower monthly payments
  • Manufacturer's warranty usually covers lease term

Leasing Disadvantages:

 

  • No end to monthly payments
  • Wear-and-tear charges
  • Mileage limitations
  • You do not build equity

 

 

 

Buying Advantages:

 

  • Pride of ownership
  • No mileage limitations
  • Monthly payments have an end
  • Flexibility to change cars when you want
  • You build equity over time

Buying Disadvantages

 

  • Higher down payment and monthly payment
  • Repair costs once warranty expires

 

 

 

If getting a new car every few years is important to you, leasing may be something to consider, however, be careful and pay attention to the realities of leasing. You don’t want to be surprised when your lease expires.