lease or buy

Finding your family’s next car can feel like a daunting task. With so many options out there, it can be overwhelming trying to figure out where to spend your money.

The first step is deciding whether to buy or lease.

Should you lease?

The decision to lease a car over buying is a personal one that should take into account your budget and financial goals. You can save on costs with a lease, but buying a car often yields better value for money spent.



With a lease, monthly payments are typically lower than those due on an auto loan. You don’t pay any upfront sales tax like you do when buying a car, and often have little to no down payment. However, you are locked in to a certain allowance of miles and keeping up with regular maintenance; both of which can cost you if you deviate too far from the agreement.

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Lease terms are often anywhere from 1 to 4 years, during which time the car is covered under the manufacturer’s warranty if anything needs to be repaired. However, you’ll probably end up spending more in insurance premiums since you typically need to purchase gap insurance in addition to your regular coverage.

With a lease, you’ll also never owe more than the car is worth — a common problem car buyers with high interest rates encounter — since you’re only responsible for the depreciation that occurs during the term of your lease. Leasing companies are also generally more relaxed when it comes to customers who have less-than-stellar credit and there is no loan approval required, so this option can provide more flexibility for those who need it.

You can also look forward to driving a new car every few years and not have to worry about selling a vehicle. You may owe money at the end of the lease depending on what condition you bring the car back in, but once the car is returned, you then have the option to update or upgrade your selection.

Should you buy?

Cars begin to depreciate the moment you drive them off the lot. If you decide to buy a car, a good option is to get one that’s 2 or 3 years old, so you can take advantage of a good depreciation discount.

While a lease payment may be less than an auto loan payment each month, in the long term, buying a car will save you more. Each payment you make on your loan helps you build equity in case you decide to sell it or trade it in down the line.



Flexibility when buying a car comes in the form of being able to sell it at your leisure. With a lease, you are locked into a contract, but if you finance, you’re only responsible for paying off the loan. You also have no mileage limit and are free to maintain your car as you see fit.

The bottom line is: If you’re in the market for a new car, you need to determine what your goals are in terms of car ownership.

If you’re in to driving new cars every few years and dealing with limitations on your personal vehicle, a lease may be just what you are looking for. If you’re looking to save over the long term, you may be best off buying a used or certified pre-owned car and driving it until it falls apart or the cost of repairs exceed the value of the car.

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