facebook_pixel

Finance

Leasing Or Buying: Which Is Better For Getting A New Car?

By  | 

Whenever I see a new car commercial, I am always a little confused at the end. When the cars prices come across the screen, I always wonder what the leasing price means. Growing up, I have never heard of someone leasing a car before—I just thought everyone bought them. With a bit of research, I want to figure out just what all this leasing business is about and if it right for me—and you, too, Millennials!

So What Does Leasing A Vehicle Mean Exactly?

When searching for what exactly leasing a vehicle means, I’ve come across a lot of helpful—and not so helpful—articles and it all pretty much boils down to this: leasing a car is just like renting a car—just like you do on vacation—but on a long term basis. You still pay a monthly bill towards the car, just like you would with a regular car note. And of course, you still pay fees and interest whenever you are late—so try not to do that. Now I know what it means to lease a car, but I still do not know if it is right for me. I have to break down the pros and cons of leasing and buying and see where I will end up.

The Benefits Of Leasing A New Car

Benefit #1: You want a badass car—without paying as much.

5725945023_dd9edc9ffe_b If you love new cars with all of the “fixin’s” but you don’t necessarily want to pay an arm and a leg for it, leasing may be for you. Why, you ask? Leasing an upgraded car is usually a lot cheaper than buying it outright. You are only paying the difference between the car’s price and the expected value of it at the of your lease, which is also known as the car’s residual value. One article put it very well: let’s say you fall in love with a new car that is worth $30,000. If the residual value is 55% after a 3-year lease, the car would be worth $16,000 when you bring it back to the dealer. During your lease, your payments make up the difference which would be $13,500. That is a crazy good price for a nice car—more than half of the sticker price is taken off!

Benefit #2: You can get a brand new car every 2–3 years.

5001511797_8125688387_bI like to switch up everything in my life every few years—rather that be moving to a new city, changing up my wardrobe, or starting a new job, I  can now change up my car, too! If you have a wandering eye when it  comes to cars—like me—this may be a good route for you to take. No puns  intended. You will always have the best and newest technology in your  car.

 Benefit #3: Usually a small down payment.

Leasing a car is great for those who do not have a large down payment saved up. For many, down payments could be $0! If you do not qualify for a down payment, however, you can always negotiate it. Many commercials show lease offers with low payments, but they require a sizeable down payment. If you want to put as little down as possible, remember that your monthly lease payments will be higher.

Benefits of Buying A New Car

6768018197_97f2298fce_b

Benefit #1: It’s Yours!

That’s right, it is all yours! So feel free to love it, customize it, dirty it up, sell it, etc.

Benefit #2: Once it is paid off—no more car payments!

Of course, the car is owned by your lender until you finish your monthly payments. But once it is paid off, you no longer have to budget for a car anymore, which I am sure you would absolutely love.

Benefit #3: No mileage restrictions.

This benefit goes well with the first—it is yours—so feel free to go on as many road trips as your little heart desires.

Of course with benefits, comes cons…and I found plenty of them—for leasing AND buying.

Cons Of Leasing A New Car

Con #1: Mileage restrictions can be a huge pain.

One of the benefits of buying your own car is that you can drive your car as much as you want. With leasing a car, you can only drive up to a certain number of miles, usually ranging from 9,000, 12,000 and 15,000 miles a year. Anything after that, and you will be paying some major fees.

images Con #2: You’re never done paying.

Another benefit about buying a car is that, eventually, you will pay the loan off completely, so you can stop putting money towards it. When you lease, you aren’t working your way to own your car.

Con #3: Shitty credit? No leasing for you.

Qualifying for a lease is close to impossible if your credit score is anything less than pretty good. If you have anything that you would consider less than good, don’t bother to even apply.

Cons Of Buying A New Car

images (1)Con #1: Down payments are a bitch.

When buying a new car, lenders usually require a 10–20% down payment. So for a car worth $30,000, you are looking at dropping anywhere in between $3,000–$6,000. It can take a while for any average Joe to save that kind of money.

Con #2: Loans can be lengthy to keep them low.

Monthly payments are on your mind when buying a car. So many people often take a longer loan to keep monthly payments which can also mean you end up paying more in interest.

I would love to jump from car to car and a lease would allow me to do that. But I also would love to have a car—that I own—and no longer make payments on it. I am still lost on whether leasing or buying a car is right for me, but hopefully, I helped make sense of those blurred lines that is buying or leasing a new car. Which did you do when you finally bought a car? Tell me in the comments!

woman in her car showing off keys

 

References

Red McCombs Auto Blog:“Should I Buy Or Lease My Vehicle” by Jasmine Watts

U.S. News and World Report: “Buying VS Leasing” by Liz Opsitnik

Leasing Or Buying a Car

  • Robin Rue

    I leased a car once before, but for me it wasn’t really worth it. I had 3 years of car payments and nothing to show for it.

  • tara pittman

    I prefer to buy my car and then keep it for 10 years or more. Cars are too expensive.

  • Great post! I believe I’ll stick with buying my car. I’ve had my current car for 9 years and it has no signs of stopping. I like being able to use money for savings or something else rather than continuing to make car payments. People should be able to make an informed decision reading your post. Nice work!

  • 204park

    I’ve both leased and owned vehicles – this was a great article talking about the pros and cons of both :)

  • Claudette

    I have done both and have benefitted from both. Tend to lease now more than buy — just an age thing and I like driving newer model vehicles.

  • I’ve done both, but I’ve definitely gone to buying only now. I’ve been able to go so long without having to buy new cars that the thought of having a perpetual lease payment makes me cringe.

  • Jasmine Espinal

    Ive leased before and it worked out great for me!

  • If you can afford getting a new car, that would be better than just leasing. For me leasing are for people who only need a car temporarily, like if you’re visiting the city for the weekend.

  • Shann Eva

    There are definite pros and cons to both. We’ve always bought our cars

  • mail4rosey

    I haven’t leased because I’m scared to go over on the miles. I have heard its a bear if you do so!

  • Cori Ramos

    Leasing a new car sounds like a nice idea until the monthly payments start. Then you wonder why you did it.

  • Leasing. Never buy a depreciating asset.

  • Karlyn Flores

    for me it would be better buy a new car if you have a budget. I scared on leasing a car

  • Parpar de Real

    If you can afford buying an new car it would be better for me i have not try the leasing car

  • Stephanie Miller

    We own 1 and lease 1 for our 2 vehicles. Makes sense for us. thanks!

  • I think is better to lease a car because sometimes getting an old car means that you have to spend money fixing It constantly, a part here and a part there. so if you could afford it I think is better to lease.

  • My husband and I are big on staying out of debt so we buy our cars.

  • Ashley

    We just bought a new car – first car payment we’ve ever had, but decided it was worth it!

Share
Tweet
Pin
Share
+1