Looking for the next vehicle can be an exciting, but also overwhelming time. It seems as though there is an endless amount of choices to be made when it comes to the vehicle, where to get it, who to buy it from, or whether we want to buy it at all. So, to help with at least one of these decisions, we will examine the pros and cons of leasing vs. buying a car.
Aside from paying cash for your vehicle, your two main options in making a car deal are leasing or buying. While most people choose to finance their vehicles, leasing may be a great option as well. Your decision will probably depend on one or more of the following factors:
- Your financial situation
- The car you’re interested in
- Your personal preferences
- And your plans for the vehicle that you want.
You’ll want to consider each of these factors when comparing leasing versus buying a car.
Pros of buying a car (versus leasing a car)
There are many reasons that financing may be a good choice when you compare car leasing vs. buying. Here are some pros of buying:
- Once you have finished making payments on your car, it is yours to do with what you wish. You are the owner. You may sell the car, trade it in, or keep it and enjoy life without a car payment—and there are no time restrictions placed upon what you can do with your car, and when you can do it.
- If you want to sell the car, and have built equity into the vehicle (meaning your car is worth more than the remaining amount on your loan), you can use that money towards a down payment for your next vehicle.
- You may sell the car at any time, even if you haven’t paid off the loan yet.
- You could make back some of the money that you paid for the car if you decide to sell. With a lease, you would have to give the car back without getting any money in return.
- You can drive your car wherever you want, with no limit on mileage.
- Wear-and-tear damage is less of an issue if you purchase your vehicle outright. Though it could lower the value of your vehicle, you won’t be charged fees for minor damage that may have occurred.
- If you want to customize or modify your car, you are free to do so with no repercussions. Just remember that modifications could either raise or lower your car’s resale value… depending on what you want to have done to the car.
Pros of leasing a car (versus buying a car)
Leasing could be a great decision for people in certain situations. Here are some pros of leasing:
- If you decide to lease a car, you will probably have lower payments than if you were to buy. The reason for this is you are really only paying for the vehicle’s depreciation while you drive it—in addition to interest, taxes, fees, and other costs.
- For those who like to keep the most recent vehicles in their possession, leasing could be the right option. With a lease, it is simple to trade in your previous car and get a newer one after your term is up. Instead of selling your old car and buying a new one – and risking being upside down on your loan – you can simply return your leased vehicle, sign a new lease agreement, and be on your way with the new car.
- With a lease, you have the opportunity to test out many cars over a shorter period of time… with less hassle than if you were to buy each car.
- If you wanted to purchase the car you’ve been driving, you will probably have that option at the end of your lease.
Cons of buying a car (versus leasing one)
As with any large purchase decision, there are potential negatives that could impact you. Here are some cons of buying:
- You are the one who will have to deal with selling your car, or trading it in, when you want a different one. Trading in is typically easier than selling your car on your own, but you probably won’t get as much money for a trade in. If you choose to sell you car, you could get quire a bit more for it, but the hassle can be hard to ignore.
- When you want to sell your car, you will probably not be able to receive the same amount that you purchased your vehicle for in the first place. Cars are depreciating assets, and so their values are continually decreasing… and more so as you rack up miles and add to the wear-and-tear.
- Though there is no limit on how many miles you can drive, the more your odometer number increases, the less your car is worth.
- Your monthly payments for financing a vehicle will typically be higher than if you were leasing one.
Cons of leasing a car (versus buying one)
Leasing isn’t the right decision for everybody. Here are some cons of leasing:
You will still need to provide a down payment, pay taxes, and pay registration fees, just as if you were buying the car, but you will also need to provide a refundable security deposit for potential damages to the vehicle.
You can’t keep the vehicle that you’ve been paying for. Instead, you must return it when your lease is up, unless you choose to purchase it… for an additional cost.
Terminating the lease early will often result in heavy fees. So, if you are unhappy with the car, you don’t really have an “out”.
You typically have a limit to how many miles you are allowed to drive, and if you surpass that number, you will have to pay for each additional mile—and it will be expensive.
Where to find the lenders and dealers
For leasing or buying, you’ll probably need to find a lender or dealer to work with. However, sometimes, this process can become overwhelming because of the sheer amount of lenders and dealers out there. That’s where we come in. After you fill out an application at Car.com, we will try to bring a lender and/or dealer to you. Our process is free and easy and we can probably help you get into your next leased or financed vehicle soon. Plus, our process is fast and you are under absolutely no obligation to work with any lender or dealer we may connect you with.