Lease Vs Buy: Which Is Best For You?
Adulting is hard. Deciding whether to lease or buy your next car makes it even harder. As one of your life’s most important purchases, it’s crucial to understand each side’s argument. To make life a little easier, we will explore the Lease vs Buy dilemma, and which decision is best for you.
Before diving in too deep, let’s take a look at the pros and cons of each.
The Pros of Leasing A Car
- Lower monthly payments
- Don’t have to worry about the vehicles longevity
- Always protected by warranty
- New car every 2-3 years
- Drive a better car for less money
- Lower down payment
The Cons of Leasing A Car
- Limit on miles
- Will pay more over time
- Never free of monthly payments
- Costly to terminate lease agreement early
The Pros of Buying A Car
- Your car is yours to do as you please
- Save money over time
- Free yourself of monthly payments once car is paid off
- Opportunity to sell car at any point
- Ability to use car as trade-in discount
The Cons of Buying A Car
- In order to avoid owing more than your car is worth – due to interest, a larger down payment is required
- Higher monthly payments
- Responsible for all repairs, as well as the cars longevity
- Car loses value every second you drive it
- Car won’t last forever
With the primary pros and cons established, it is still important to measure these against your current, and future, situation. When giving serious thought to your lease vs buy decision, ask yourself these questions:
What do you use your car for?
When deciding whether to lease or buy, the first thing to establish is what the car will be used for. This may sound stupid, but it is something many buyers don’t consider. The amount of miles you expect to put on your car is often the deciding factor in your lease vs buy debate. Most lease agreements require your to pay a minimum of 20 cents per mile over your yearly limit. Whether your car will be used for average in-town use or long, frequent trips, establishing use is essential.
Do you like to customize your vehicles?
Based on personal preference, your car can either be a piece of art you can’t touch, or your very own canvas. The freedom to add a spoiler, install new rims, apply decals, or replace your engine is a freedom some can’t live without. Although no one is stopping you from acting on these custom desires, be aware that you will have to return your vehicle in its original condition.
What is your financial preference?
Some view freedom from monthly payments as the greatest feeling in their adult lives. Some simply don’t mind setting up automatic payments and never looking back. Although buying a car will likely mean higher monthly payments, it’s only a few years until you reap the benefits. If keeping your balance from dropping too low each month is what is truly important, leasing may be your preferred route.
What is your financial situation?
Preference is a privilege. Situation is reality. Depending on your current cash flow and credit rating, the lease vs buy debate must be viewed from a more logical perspective. For those with low cash flow, but great credit, leasing is a great option until cash flow increases. For those with high cash flow, buying is often the financially responsible route.
How important is new?
It doesn’t matter how quality of care you give your car, it’s still going to age. With technology continually improving and evolving, a 2015 model can be very different from a 2018 model. Leasing allows you to the opportunity to drive the newest models, every 2 to 3 years, at the lowest price. If new is important to you, leasing may be the answer.
Ultimately, there is no winner in the battle of lease vs buy. When making your decision, it requires careful analysis of preference, reality, and your car’s intended purpose. Think smart. Act smart.
If you would like to discuss your car insurance options, contact us today.