When it comes to leasing versus buying, there are a lot of things to consider. Your driving habits, as well as your personal preferences, will play a big role here in what option makes more sense for you. Here are the main questions you should ask yourself when trying to decide which step to take with your future new car.
How much do you drive?
Leases are notorious for having mileage caps, with costly overage charges if you go over their allotted miles. While most drivers shouldn’t have an issue with this, if you do commute a long distance or take regular and long road trips, you may end up costing yourself a lot of extra money when you go to turn in your leased vehicle with more miles on it than your contract allowed you.
However, a leased vehicle comes with the perk of being under warranty, which is a huge benefit for people who drive a lot.
How much money do you have to put down or spend on a car?
Leasing can help people who only have a couple thousand dollars on hand get into a really nice vehicle. You may not have the money to outright buy a 2017 Honda Accord Hybrid, but with just a few grand you can take one home and then make monthly payments after that. If you don’t have a lot of money saved up but want something nicer than your savings could get you, a lease may be a perfect choice for you.
Otherwise you may be stuck buying something not so nice with your limited funds. Sure, you won’t have a monthly payment to make, but something older and unreliable may cost you more in maintenance than you’re ready for.
You can look into getting an auto loan if you have enough money to put down and good enough credit. You’ll still have monthly payments to make, but unlike with a lease, your car will be yours at the end of the payment period.
Do you want the resale value?
When you lease a car, you turn it in after the lease period is up. That’s it. All the money you spend on it is gone, and so is the car. You can look at this as money you’d be spending anyway on transportation, and to get rid of a car after a few years and get something new is ideal for a lot of people who prefer driving something newer and under warranty.
However, if you want something you can resell or have some equity in, you may be better off buying a car. While you’ll never be able to get all of your money back due to fast depreciation of automobiles, you’ll at least be able to get some money back when you sell a car you own.
Depending on your personal preferences, financial situation, and long-term plans for a vehicle, you may be better off leasing versus buying. If you’re looking for something nicer, newer, under warranty, and with little long-term commitment, a lease will be great for you. If you’re looking to keep some ownership equity, have good credit, and don’t mind having a vehicle around after it’s out of warranty, you may get more satisfaction and miles for your money by buying your next car.