Buying vs. Leasing a new Vehicle

Deciding between leasing and buying a new vehicle can often be a difficult call. On the plus side, leasing lets you get into a vehicle that otherwise might be financially out of reach thanks to lower monthly payments. On the other hand, however, leasing means a never-ending cycle of monthly payments. The upside to buying your vehicle is that the initially higher monthly payments will end at some point and you will own the vehicle.

The Pros and Cons of Buying

While it may seem that buying a brand-new vehicle doesn't make financial sense due to high sticker prices and rapid depreciation, you might want to think again. Thanks to the lower maintenance costs, strong resale values that many vehicles offer today, and lower interest rates, (some manufacturers offer low financing), buying a brand-new vehicle may actually save you money over the long run. Here are a few of the pros and cons of buying a new vehicle:

Buying Pros

Buying saves money over the long term.
You can make changes to your car as you please.
You have the freedom to drive as much as you like. There are no mileage penalties when you buy your car.
Buying offers the flexibility to sell your vehicle whenever you like.
You have a trade-in for your next purchase.

Buying Cons

Your monthly payments will probably be higher than the average lease payment.
You have to put up a bigger down payment.
You're responsible for maintenance and repair costs when the warranty expires.
New vehicles depreciate in value by as much as fifty percent over the first four years.

The Pros and Cons of Leasing

Initially, leasing a vehicle may look more appealing than buying it. In general, you will only be expected to pay the difference between the car’s initial sticker price and its expected value at the lease’s end, along with any finance charges. But, don’t forget, when the lease ends, you will no longer have a vehicle to drive. Here are a few of the pros and cons of leasing a new vehicle:

Leasing Pros

You drive the car during its prime and most trouble-free years.
You’re always driving a late-model vehicle.
The dealer will service your leased vehicle, usually at no charge.
You can drive a better-equipped and more expensive vehicle.
Your vehicle will have the latest active safety features.
You don’t have to go through the headache of selling it or trading it in when it’s time to move on.
There could be significant tax breaks for business owners.
Dealers usually offer great deals on re-upping a lease.

Leasing Cons

As attractive as leasing a vehicle may appear, there are several disadvantages which include:

Because you’re paying for the car when it depreciates the fastest, leasing usually winds up costing more than an equivalent purchase loan, in the long run.
By endlessly leasing, monthly payments go on forever.
When you buy your car, truck, or SUV, the longer you own it after the loan is paid off, the more value you get out of it.
Experts say that the most economical way to own a vehicle is to buy and keep it until it becomes too expensive to repair.
Lease contracts usually specify a limited number of miles and you’ll pay extra at return time if you exceed that limit. Penalties for excess mileage range anywhere from 10 cents to as much as 50 cents for every additional mile. It is important to read the fine print and try to estimate how much you expect to drive. Plus, many leases don’t offer discounts for unused miles.
The dealer may charge you for excess wear and tear if you don’t keep the vehicle in good condition. You will be on the hook for any damage that occurs during the lease.
Early termination penalties and fees and penalties can be quite large if you can’t make the payments and need to return the vehicle.

In general, deciding between buying and leasing a car can be a tough call. Each choice has its own unique set of pros and cons. In the end, however, like most things in life, the choice comes down to lifestyle, personal preferences, and of course, money.

Bortz Chevrolet