Last updated on October 5th, 2023 at 04:07 pm
According to a study done by New York Times, cars are the second largest purchase made by US consumers. When you buy a house, the house is yours when it’s paid off, and it’s the same with financing a car.
With the change of time, now one can even lease a car for their convenience. Which one is more practical in the quest of car leasing vs buying? The answer depends on your priorities. Whether you are thinking about buying or leasing a car, you should know the pros and cons of both sides before making a call.
Should you lease that new car or should you buy it? This is not a new question. But, with the slowdown in production, shortage of inventory, and increase in the price of cars, navigating the choice has become more difficult. Let’s discuss it in broad.
Car Leasing vs. Buying: Pros and Cons
Car Leasing
When you lease a car, you pay for the right to drive the vehicle for a fixed period- three to four years. Most of these leases are financed through the dealer.
The Benefits of Leasing a Car:
- Lower Payments: If you are trying to keep the monthly spending budget in check, leasing a car is the best option. Leasing a car offers the benefit of making lower payments on a newer car than if you were buying it.
- Less Money Down: This is another great benefit of leasing a car. The initial sticker may not be as bad as what you pay throughout the lease. You will be able to drive off the lot without putting any money down.
- Manufacturer Warranty Options: While you have the car keys, you are more likely to enjoy the warranty protection benefits. This typically lasts for the first three years or at least 36,000 miles.
The Drawbacks of Leasing a Car:
- Mileage Restrictions: Leasing will help you financially while getting a new car, but you will not be fully in control. Most leasing agreements come with mileage restrictions, which means the mileage is restricted to 10,000 to 15,000 miles. If you exceed this limit, you need to pay an additional amount per mile of usage.
- Additional Costs: You need to pay for the sudden wear and tear that your vehicle will suffer, not the excess mileage fees.
- You Won’t Own It At The End: Yes, this is the truth. Unless you choose a lease buyout, you either need to pay for renewing the lease or lease a new vehicle. Even though you are making the payments, the car will never be yours in the long run.
Who is Leasing Best For?
Leasing is the right option for you if you are willing to get your vehicle without a substantial financial commitment upfront. Unlike making a huge down payment while buying a car, leasing will ease your monthly cost to a more manageable number. Additionally, you can drive a more luxurious vehicle that you might not be able to afford.
But, you also need to keep in mind the mileage restrictions and potential wear and tear charges. If you are planning long road trips in the upcoming time, leasing is not for you.
Buying a Car
Buying a vehicle means that you have the possession or ownership of it at the end. Most brand new cars come with a big price tag. According to the data from Kelly Blue Book, the average cost of buying a new vehicle in the year 2021 is over 47,000 dollars.
Benefits of Buying a Car:
- No Mileage Limits: You do not need to keep the mileage in check when you buy a car. Whether you want to go on a cross-country trip or rack up to 100,000 miles in a year, you can do it without worrying about paying per mileage.
- Wear and Tear Charges: Along with the mileage charges, you do not need to worry over the wear and tear of the vehicle.
- Sell and Trade-In the Vehicle: You can either sell it or trade-in after the auto loan is paid in full since you own the vehicle. When you are ready for a new car, truck or SUV, just sell it or trade it in with a new model at the current market value based on the condition and mileage.
Drawbacks of Buying a Car:
- Higher Monthly Payments: Yes, this is very true. Your monthly payment will increase when you buy a car. You are going to spend more each month.
- Big Down Payment: The more the down payment, the better it will be for you. In this way, you can reduce the size of how much you need to borrow and, by extension- those monthly payments, but it will still gulp down a big chunk of your savings.
- Long-term Maintenance Cost: Owning a car is also like owning a house. There will be some new breaks and nicks almost every month. You will feel good about owning it, but you need to pay the maintenance fee in the end.
Who is Buying Best For?
If you want to own a vehicle and have full control of the finances, then buying is best for you. You would not need to worry about mileage or additional wear and tear charges.
However, do a little homework before buying a car because you need to figure out the loan, interest, and other things.
Final Considerations
Both leasing and buying have their pros and cons. In the debate of car leasing vs. buying, every individual gets confused. So no matter which one you choose, consider both aspects’ given pros and cons. This will help you to make the right decision. Determine your finances, driving habits, and credit score, then decide which one you should go for.