Car Leasing and Buying: Advantages v. Disadvantages
When thinking about getting a new car, there is always that one large question,“Do I want to buy a car or lease it?” It seems to be that most people who lease a car, continue leasing cars through life, and most buyers are only buyers, but for those that are new to the car shopping experience, there are many pros and cons to both.
When you buy a new or used car, it’s yours, forever. You own that car, and come what will, it’s yours to maintain. While, it can be expensive at first because you may have to make a large down payment it can also you through the years as you have to make repairs.
The alternative to buying a car is leasing a car, which also has its pros and cons. Leasing a car can be less expensive and the vehicle is almost always under warranty so there is less worry about needing to pay for car repairs. You’re basically renting it for a long-period of time, and you have to be incredibly careful with it. Just like renting a car, you will have to pay for any and all damages in the end.
It all comes down to pros and cons. We’ve listed some of the major advantages of each option to help give consumers a better sense of what might be the best for them.
- The down-payment required for a lease is typically less substantial than the down payment needed to finance a car. Most down payments for car leases can be anywhere from $0 to several thousand dollars up front, followed by a monthly fee.
- Lessees don’t own the car, so they don’t need to worry about selling it when they want a new one. Once the lease is up, the dealership that the car was leased from takes the vehicle back.
- Most leases last as long as a typical warranty, so if any repairs spring up, they are usually covered. That means there are no unexpected costs for large repairs, unless caused by the driver.
- Sometimes, leasing makes it possible to afford something you could not normally finance. i.e. Drive a better car for less.
- Instead of saving up a lot of money for one car, lessees can get into a car with a smaller costs upfront as long as they have proof of a stable income.
- In some instances, lessees can buy the car at the end of the leasing period.
- Lessees have annual mileage limits and if they are exceeded, there is a penalty fee.
- Lessees have to be 100% on top of maintenance — it is important to get regular checks and to not damage the car in any way. If there are dings and dents, they will have to be repaired by the time the lease is up.
- Lessees can’t just “change your mind” because the car turns out to be a bad fit. Once locked in, a lessee has to wait for the leasing agreement to end.
- The car comes as is, there are no options to customize it based on personal preference.
- Leasing can be more expensive in the long run, due to higher insurance rates and never ending monthly payments. When purchasing a car, payments will eventually end; when leasing a car, you have a monthly fee until the end of the leasing agreement.
- Monthly payments don’t add up, so if you want to buy the car at the end of a lease period, a lessee doesn’t pay the difference. Instead, another price will be negotiated.
BUYING OR FINANCING
- Simply put, car owners own the car. They decide what they want do with it, how they want to treat it and what changes or repairs to make to the car.
- In the long run, buying a car can be less expensive and you can always trade it in for something new and pay the difference.
- Car owners don’t have to worry about fees or penalties if you drive a lot of miles.
- Car owners have the ability to add options and customize the car to fit their needs.
- If the car receives small damages like dings or scratches, although not visually pleasing, owners don’t have to take care of it right away (or ever).
- Since owners are stuck with the car, owners typically appreciate and learn a lot more about their car.
- For those that aren’t buying a car outright and that need to finance a car, they need to make a larger down payment (which can be several thousand dollars) or the monthly finance cost will be higher.
- Depending on a buyer’s income, a buyer may end up spending the majority of several paychecks just to afford the first down payment.
- Once the warranty expires, all repairs are out-of-pocket, unless an extended warranty was purchased.
- Depending on how much the specific car depreciates, an owner may end up with a car that has very little cash value at the end of it’s life.
These are just some of the good and bad points we’ve collected about buying and leasing a car. Sometimes the good outweighs the bad and vice-versa. There is no “better decision” because there are many variables that have to be considered for each person. Both choices look great if you only look at the advantages, but both choices have their downsides too. You have to do what’s best for you when the time comes to buy or lease a car.