When you are in the market for a new car, you have two options: buying or leasing. Both options have their pros and cons depending on your exact needs. Whether you've just completed driver's ed or have been driving for a few years, use this guide on buying vs. leasing to decide what is right for you.
Understanding the Biggest Difference Between Leasing vs. Buying
One of the biggest differences between buying versus leasing is that with buying, you actually own the car when you pay off your loan. With leasing, you have a monthly payment for the entire duration of your lease, but that doesn't go toward ownership of the car. After your lease is over, you have to turn the car back in. There is an option at the end of a lease to purchase the car. The downside of this is that all of the lease payments you have made don't go toward whatever it ends up selling for.
Pros of Buying a Car
Buying Has No Mileage Limits
A leased car is under contract for a set number of miles per year. You get charged per mile for every mile you exceed this agreed-upon limit by. If you own your car, you can drive it as much as you want, and it will only decrease the overall value over the long run.
Buying Eventually Costs Less Than Leasing
Since you are paying the entire price of the car including taxes and fees when buying, your monthly payment will be higher than when you lease a car. Leasing is less expensive because you are only paying the depreciation of the vehicle during your lease term along with any additional taxes and fees. You may have to pay additional fees when turning the vehicle in at the end of the lease, however. Over the duration of the lease, you will end up paying more than buying the car outright.
Buying Doesn't Require You to Make Repairs
Although you don't want to see your car get dented or scratched whether you are leasing or buying, it does play a factor. During a lease, any damage that occurs to the leased vehicle will result in a fee if it isn't fixed. If you buy a car and it gets scratched, you just have to live with it, but it won't cost you anything unless you decide to get it fixed.
Pros of Leasing a Car
Leasing Lets You Drive a Luxury Car
One benefit to leasing is that you can get a lower payment on a luxury car than if you were to buy one. This can let you drive in style for a couple of years to see if you think it's worth it or not before taking the plunge and spending a lot of money on one.
Leasing Gives You Better Safety and Technology
Whether you buy or lease a brand new car, you have the chance to get a vehicle with the latest and greatest safety features and in-car technology. The only downside is that whenever you buy a car you are stuck with the same features for the life of the car, but with a lease, you can get the newest features every two years.
Leasing Can Have Maintenance Included
A lease can include the option of free scheduled maintenance such as oil changes, tire rotations, and inspections. There is a chance you can negotiate for these to be included in your lease if they aren't already. If you own the car, you are on the hook for all of these things yourself. Some dealers may offer the first few oil changes for free, but you will still pay more in the long run.
Should You Buy or Lease?
It is a big decision whether or not to buy a car or just lease one. You will be happy with whatever choice you end up making, but either way, you should make sure you're prepared to hit the road. Take an Aceable driver's ed course to refresh your driving knowledge to avoid any mishaps on the road, especially if you're a new driver!