Buying vs Leasing: Should I Buy or Lease My New Car?

You have done the research, test driven your dream car, and have settled on a price - now what? One of the biggest parts of the car-buying process that many people forget about is deciding which financing option is the best for their lifestyle. Choosing between buying and leasing is difficult. If you are asking yourself whether you should buy or lease a car, never fear. Here are the pros and cons of each financing option.

Buying

For many people, buying is the go-to financing option. When you purchase a car, you will own the car outright when the loan is paid off. Until then, the lender owns the vehicle. You gain equity throughout the length of the loan and once the loan ends, you don't have to pay for the vehicle any longer outside of the typical costs of ownership like gas and insurance. There is also no mile restriction on buying a vehicle, which is a big advantage for those that live in rural areas or have a long commute.

There are some negative aspects of buying a car, though. The biggest drawback is having to prepare a sizable down payment up front. Typically, lenders look for 10-20% down on car purchase. Also, the monthly payments can sometimes be higher than expected, which can cause the loan term to be longer than you want.

Leasing

While leasing a car is slightly similar to buying one, there are some big differences. A leasing loan is based on the entire cost of the vehicle, minus your down payment and trade-in value. You are only financing the depreciation that occurs during the lease term, though, which means you have a lower monthly payment.

Leasing a vehicle is also a great option for those consumers that like to have the most up-to-date technologies. When leasing a vehicle, you only "own" it for up to three years. After this three-year term, you return the vehicle. By turning in your car every few years, you ensure that you are receiving the most updated infotainment and tech.

One of the biggest drawbacks of leasing, though, is the limit on the number of miles you can drive before receiving penalties. Mileage restrictions typically range from 9,000 to 15,000 per year and, if exceeded, will cause you to receive a fee per mile at the end of the lease. Leasing is also not a good option for those consumers that like to modify their vehicles. A leased car must be returned in original condition with normal wear and tear. Any alterations mean you will have to pay to have the car returned to its original condition.

Choosing to buy or lease your next vehicle is entirely dependent on your lifestyle. Consider how you like to drive your car and decide based on those factors.

Choosing to buy or lease your next vehicle is entirely dependent on your lifestyle. Consider how you like to drive your car and decide based on those factors and Aransas Autoplex will be there to help you every step of the way!