To Lease or To Buy a Car

When shopping for a new car, you should do yourself a favor and consider the pros and cons of leasing or buying. That’s because while buying is the more popular method, leasing might be right for you. Purchasing a car is not a one-size-fits-all situation. Here are some things to consider about leasing vs buying a car.

Pros and Cons of Leasing a Car

Pros: 

• Low Monthly Costs. Lease payments are generally lower than the payments made on a new car loan.
• New Cars. When your lease is up, you can return your car and get a new one.
• Maintenance Costs. Most leases are only a few years old, which means the maintenance costs are typically covered.

Cons:

• Lack of Control. Leases come with mileage restrictions and other guidelines that can make them frustrating. You don’t own the car, so you never have complete control over it.
• Fees. Leases come with fees for a variety of things, like excess mileage and modifications to the car.
• Locked In. If you want to cancel the lease, you’ll get hit with an early termination charge that can be quite hefty.

Pros and Cons of Buying a Car

Pros:

• Complete Control. You own the car, so you can do whatever you want with it.
• Overall Costs. Studies have found that the overall costs of owning a car are generally cheaper than leasing several cars for the same amount of time.
• Deductions. If you use your vehicle for business and personal, you can deduct some of the depreciation costs.

Cons: 

• Deprecation. Your car will lose value quickly. Some estimates put a new car’s value going down by up to 25 percent in the first five years.

• Other Costs. Driving costs add up quickly, from gas to repairs to insurance fees.

Do One Thing: Prior to purchasing a car, consider the pros and cons of leasing and buying. Pick the strategy that best fits your budget and habits.