It's an age-old question that can be confounding for consumers who need to replace their car: Should I buy or lease my next vehicle?
It's question that doesn't have a clear winner! Lots of arbitrary factors will likely determine whether leasing or buying is best for you.
These points can help you make your decision.
Leasing is a good choice if you tend to get bored with your ride or if you love that new-car smell. It offers the opportunity to switch vehicles relatively often.
You're not responsible for paying the entire purchase price. Instead, you're merely charged for using the car during your lease contract.
So, if you lease a vehicle for five years, you pay for the value of the car over that period, but not the amount left at the end of the term when you turn the vehicle in.
The biggest attraction to leasing is lower monthly payments. And while some leases require a small down payment, many allow you to pay $0 down. You can stay within your budget and spring for a nicer vehicle than you could if buying.
One of the biggest headaches when you lease is the mileage restriction. Most leases come with a set limit on miles, and the penalty fees can be stiff if you go over. Definitely something to consider if you do a lot of driving!
Another potential negative is that when you lease a vehicle, you build no equity. You're basically renting the car, so at the end of the term you'll have nothing to show for all the money you've spent.
And, there's a chance you could face additional fees if you don't return the car in excellent condition.
The biggest selling points for purchasing a vehicle include no mileage restrictions, an end to monthly payments once your loan is paid off, and more control over the vehicle.
You can customize it however you want, and slack off on having it serviced. (But why would you want to do that?)
If you pay the car off and decide to sell it, you'll be able to get a portion of your investment back.
The most significant drawbacks are the higher monthly payments on financing, plus the possibility that you'll have to make a substantial down payment.
And while you will have equity in the vehicle and will have the option of selling it, you can't completely predict depreciation and other issues that will decrease its value.
Making your decision
Consider all of these factors and how they apply to your own situation.
Calculate what you can afford to spend upfront and monthly, and then look at what a dealership is prepared to offer you regarding a lease or financing. Which deal is better for you?
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