Lease or Buy?

When it comes to buying or leasing a car the options can be confusing. To help you make an informed decision on whether to lease or buy your next vehicle, keep in mind that:

When you lease a new or used car, you only pay a portion of the vehicle's cost, which is the part you use during the time you are driving it.

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Which is Best For You?

Is leasing or buying the best way to finance your next car? It's hard to give this a quick answer since there are so many trade-offs. However, if you take a closer look at your lifestyle, your needs and your preferences, you can probably come to a reasonable conclusion.

For example, if you need an upscale car for business, perhaps to entertain clients, leasing allows you to drive a luxury vehicle for less money. It might also provide a good tax write-off. However, if you don't need the status of a new car and prefer to keep automotive costs as low as possible, the best choice would be to buy a new or used car and keep it for as long as it is reliable. Ultimately, you can say good things about both buying and leasing. Your choice might be more of a combination of personal tastes and priorities than pure dollars and cents.

Leasing: Who Owns It

You do not own the car when you lease. Instead, you're paying for the use of the vehicle, and the finance institution that you leased it through actually owns it. This is why you pay less per month in a lease than if you were to buy the car.

Buying: Who Owns It

Whether you pay for the car with cash, or finance it and make monthly payments, it's still yours. Of course, if you're financing it, you'll have to meet the obligations the lender requires, like a certain down payment amount and timely monthly payments. If you don't, they have the right to repossess the vehicle.

Leasing: Up-Front Costs

Leases often do not require any type of down payment. All you usually have to pay is the first month's payment, a security deposit, the acquisition fee and other fees and taxes. Yet, as with any purchase, if you want to lower your monthly payments you can always pay more upfront.

Buying: Up-Front Costs

If you're financing it, the bank will probably request a down payment. If you have a vehicle to trade-in, you can use that equity towards your down payment. Your down payment amount is usually based on the lender's requirements and your credit score.

Leasing: Future Value

In most leases you don't end up owning it so you don't end up selling it. That's the financial institution's job. Although you may have mileage limits and wear and tear guidelines that, if you exceed them, could cost you extra money when you turn vehicle back in.

Buying: Future Value

Your vehicle will be worth whatever you can sell it for in the future. Its value will depend on how well you maintain it. Be smart and protect your investment with regular scheduled maintenance at a factory-authorized facility.

Best Cars to Lease

The best cars to lease are those with the best book value after the term of the lease. Since they depreciate less, you pay less, you pay less. Make sure to review the lease ratings to see which cars best retain their value.

In Summary

Leasing makes it easier to get more car for less money. This is because you only pay for the value of the car that you drive, instead of buying and owning the entire worth of the vehicle.

Buying frees you from the oversight that's involved in leasing. The car is yours to do with as you wish. Ultimately, it's up to smart car buyers to weigh the pros and cons, determine their needs and decide what choice best suits their lifestyle.

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