To Buy or Lease: That is the Question

Buy or lease? Buy or lease? Once you have decided which car you want to drive, this question can run through your head countless times. There are a lot of variables to consider as you aim to ensure you are making the wisest decision for you.

To Buy or Not to Buy

Obviously, the biggest benefit to buying is that you own the car. It is yours to do with whatever you please. However, that also means that you have to deal with the negative equity that many cars carry with them. Unless you plan on keeping your car long after it is paid off, this is something you will want to consider. When you go to trade in your car in a few years, you will probably owe more than the car is worth.

When it comes to financing, buying a car will usually get you a lower interest rate. However, Consumer Reports states that your monthly payment will still be higher than if you lease because you are paying off the entire value of the car, not just the estimated depreciation during the length of your lease.

Leery About Leasing?

Leasing cars gets a bad rep because you never actually own the car. Just like the name implies, you are simply borrowing it. However, that also means you are only paying for the time you are using it. Many people lease because they can get their dream car for a lot lower monthly payment. While the interest rate and fees are usually higher on a lease, you may get lucky and get a really good deal on a lease from the dealership.

One of the biggest drawbacks to a lease is the restriction on mileage and customization. If you go over on your mileage allotment, you can expect to pay a lot of money at the end of your lease. You cannot add on anything custom, and you have to be nervous about causing any damage to the car since it is not technically yours. However, it is important to note that if you do end up purchasing your car at the end of the lease, you do not have to worry about any of these drawbacks.

In summary, if you are the kind of person that gets a car and keeps it for a long time, buying is your best bet by a long shot. However, if you always like to have the newest ride with all of the latest technologies, leasing may actually save you money because you will never have any negative equity to worry about.