When you are in the market for a new car, you may be tempted to lease the vehicle rather than buy it. Each option has its own pros and cons. If you're not sure which one is best for you, compare the benefits of buying and leasing to help you make the right choice.
Leasing often costs less in the short term, but buying a car usually works out to be cheaper in the long term. If you don't have a lot of money for a down payment and your budget is limited, leasing might have more benefits for you. Kimberly Palmer of U.S. News and World Report says that many leases don't require any payment up front, and your monthly payments will probably be lower than purchasing the same type of car. However, if you buy the vehicle and keep it as long as possible, you will get more value.
Leasing offers more flexibility to get a vehicle that is suitable for a changing lifestyle. If you have a convertible or a sports car but you're hoping to have children soon, leasing will allow you to make a quick change if necessary. You can easily swap your "fun" car for a station wagon or minivan. You won't have to worry about selling it or haggling to get the best trade-in value from a dealer. Buying a car makes more sense if you don't expect your vehicle needs to change over the next several years.
For some people, cars are nothing more than transportation. They purchase a plain but reasonably priced vehicle, drive it until it is worn out, then move on to a similar vehicle. For these purchasers, buying a car offers the most benefits because they will save money in the long term. Others see their car as a status symbol. They prefer to buy luxury models and to get a brand new car every two or three years. These people benefit most from a lease that gives them lower payments and allows them to switch cars regularly.
When you buy a car and keep it as long as possible to maximize its value, you will probably have to pay for some repairs. Once the initial warranty period is over, you can buy an extended plan or pay for repairs as they occur. According to Leaseguide.com's Guide to Leasing, you won't have to pay for repairs for most leased cars because they are still under the factory warranty. Many automakers provide a three-year full warranty. Three years is also the typical lease length, so if your car needs any repair work while it is in your possession, the cost will be covered.
When you own a car, you don't have to worry about how many miles you drive or whether it gets little dents and dings. If the kids spill sodas on the seats, it's no problem. When you lease a car, there will be very specific limitations on how many miles you can drive it each year. You will also have to pay for anything that is deemed to be "excess wear and tear" when you turn in the car at the end of your lease. This can be quite expensive if you have been hard on the vehicle.
