Should You Buy Or Lease A Car? 5 Questions To Ask

It might not always seem black and white when it comes to deciding whether to buy or to lease a car. There are pros and cons to each, but there are some things to think about that may have you leaning more in one direction. It also helps to calculate your potential savings to see which makes more sense. When deciding, ask yourself these 5 questions, which should help.

How do you feel about your overall monthly costs?

As long as you lease, you’re renting the car, so you will have a monthly payment. A few things about that:

  • If the thought of always having a payment bothers you because you’re looking for ways to minimize your monthly expenses, you may want to buy a car rather than lease. If you really want to get a big bang for your buck, consider buying one that’s a couple years old with low mileage. Here are some ideas to get the best deal when buying a car.
  • You will have a choice to buy the car at the end of the lease, but the details of the contract matter if you decide to go that route.

Does your current vehicle look like it went through a war zone?

Wear and tear matters with leased cars, so consider the following:

  • If your kids will likely add their own touch, leaving behind stains on your car seats and carpet or you simply find it hard to keep your car in good shape, you may want to purchase instead of leasing. If you return the car in a condition outside of what’s considered “normal” wear and tear in your lease contract, you’ll be responsible for some additional costs. Check the terms of the potential lease for the specifics.
  • If you buy a car, you can pretty much do as you please since you own it. Wear and tear matters more if you want to resell the car at some point later down the road.

How fast do you rack up miles on your car?

There’s typically a limit to the number of miles (usually 12,000 – 15,000 miles per year) you can put on the car during your lease contract. Going over that limit will be an extra cost.

  • If you know you’re likely to go over the approved mileage, but still prefer to lease, consider purchasing additional miles upfront.
  • If you want to drive as far as you want and as often as you want, without restrictions or any additional costs, purchasing might make more sense.

Do you value being able to switch from one new car to the next every 3 or 4 years?

Leasing is an easy way to stay up to date with the newest models available.

  • We all have things that we value and are willing to pay for. If being able to drive the latest and greatest car is something you fancy, the lease could work great for you. Just make sure that constant monthly payments fit within your budget.
  • If you aren’t really into cars or you are the type to keep a car for 10 years, without payments, and feel like you’ve won, purchasing will likely make you feel more at ease.

Do you need a car, but you’re short on cash or don’t want to use your savings?

Depending on where your credit stands, you can typically get into a leased car for either no money down, or very little upfront and you usually have a lower monthly payment.

  • If you want to get into a car without eating up too much of your savings or lack thereof, a lease could work for you.
  • If you don’t want to return the car in the end or be faced with a choice to purchase it or go another route in 3 years at the end of your lease, you may prefer to simply purchase a car upfront.

The decision to buy or lease is a very personal one. It depends on your financial situation and what you prefer and value.

Either way you go, arm yourself with knowledge. If you decide to go with a lease, be prepared to negotiate the terms of your lease. If you decide to purchase a car instead, know what to consider whether you decide to go with a used car or a new car.

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