Leasing or Buying: What’s Cheaper?

If you’re in the market to buy a new or used vehicle, you’ve probably wondered whether you should lease or buy your new ride. Leasing and buying a vehicle both offer their advantages and disadvantages. Knowing your automotive needs and budget can help you better plan and decide whether leasing or buying is best for you.

For many, the main concern is cost difference; which is cheaper, a car lease, or an outright purchase? Today, we are going to explore both avenues as we help you determine which car-buying option is best for you.

Want a Lower Monthly Payment – Leasing is For You

When you lease a vehicle, you are essentially renting the vehicle from the dealership for a predetermined amount of time. Lease terms can run anywhere from one year to a couple of years. During the lease period, you will only be paying a monthly fee in exchange for using the vehicle. Additionally, there’s typically an upfront fee that you have to pay in order to cover fees and taxes associated with a new vehicle lease. When your lease period is up, you will have the option of renewing the lease, upgrading to a new vehicle, or buying the vehicle.

There are a couple of advantages when it comes to leasing a vehicle. For starters, because you’re not purchasing the vehicle outright, your monthly fee will be much lower than a monthly car payment if you were to buy the vehicle instead.

Leasing a car also allows you flexibility in that you can always upgrade the vehicle without a major financial change. For some drivers, this flexibility keeps them from being stuck in a specific vehicle. If your life circumstances change and you need to change vehicles or upgrade to a larger vehicle, having a lease agreement can prove beneficial.

Thinking about The Long Term? – Buying Might Be Best

If there’s a specific car you want and you’re thinking about owning it for the long term, then purchasing the vehicle instead of leasing it might be the best option for you. Financing a vehicle means that you are purchasing the vehicle outright from the dealership and that it belongs to you. A car purchase can be expensive and many people don’t have the cash to purchase it outright. For this reason, many drivers take out an auto loan either with the dealership or their own personal bank to afford the vehicle.
While purchasing a car brings with it a higher monthly payment. You do have the satisfaction of knowing the car belongs to you and not the dealership. With this ownership you don’t have to about driving a limited number of miles per month, you don’t have to worry about additional fees if wear and tear occur to your vehicle, and you don’t have any obligation to own the vehicle for a specific period of time as you can resell or trade it in any time you choose.

Financing a new vehicle is an especially attractive option for drivers who don’t care about having the latest vehicle on the road. When it comes to affordability, financing brings with it a higher upfront cost, but if you can save up a hefty down payment and tackle your auto loan payments quickly, you’ll find that you’ll spend less on your automotive cost in the long run.

Know Your Needs

In the short term, leasing a vehicle is much cheaper than financing a vehicle. However, over a five to ten-year period, you will start to notice that automotive affordability is found with drivers financing their vehicle instead of leasing it. Most common auto loans are issued for 36 to 84 months (or three to seven years). Once you complete payment on your auto loan, you will no longer be responsible for monthly payments on a vehicle you now own.

Knowing your needs, and what you want out of the vehicle is the first step in determining whether leasing or car buying is right for you.