Own or lease?
June 07 2018
Is it time to upgrade your car? If you want to drive a newer model, you have two options: lease or buy. But what are the differences between leasing and buying, and why would you choose one over the other?
Long Term vs. Short Term
When you buy, you have the option between new or used, and since you own the vehicle, you can keep it for as long as you want. With a lease, however, you only have that car for a certain amount of time, usually 36 to 48 months.
Buying a car requires paying a down payment and sales tax, but there's little to no money down and no upfront taxes when you lease. Monthly lease payments are usually lower than loan payments on an equivalent vehicle, but since you're making payments on a depreciating asset, leasing will likely cost more over the long term.
As owned vehicles age they may require costly repairs. Since leased cars are newer models, they usually only need routine maintenance, which may even be free depending on the warranty. On the other hand, leased vehicles come with mileage restrictions (usually 10,000 to 15,000 miles) and overage fees to consider. Excess wear and tear will also cost you, as will early lease termination.
Making the Choice
The right option for you depends on your lifestyle and budget. If you're an occasional driver who just wants a nice, reliable car for short commutes and weekends, leasing may be a good choice. But if you prefer a longer commitment without restrictions and potential fees, buying might be better.