Leasing vs Buying a Car: Which is Best?

When you are looking for your next vehicle, it can be confusing to know what the best purchasing option is for you. When you are considering leasing a car or getting a car loan, it is important to know the pros and cons. Wes Finch is here to help with some quick knowledge and, if needed, a finance department that can help.

The Benefits of Leasing

There are benefits to both leasing or buying a car and it is important to know the pros and cons of each. Here are a few of the pros for leasing:

• Lower Payments: When leasing, you are paying for the vehicle’s depreciation, the value lost while you drive it, instead of owning it. This means that monthly costs are often less than when buying.
• Ability to drive a new car every few years: The average length of a lease contract is 36 months, or a 3-year lease. This gives you more ability to upgrade sooner and drive something new. If you want to have the newest tech or more modern features, leasing can be a good fit.
• No worries about selling/trading: When the lease ends, you simply return the car back to the dealership and can start a new lease. You can avoid the stress of trying to sell or trading it in.

The Advantages of Buying

Buying or financing a vehicle is a good option for those who are looking for a bit more freedom with their vehicle. Here are a few of the pros:

• Ownership: One big difference between buying and leasing is ownership of the vehicle. When you do an auto loan, your monthly payments go to eventually owning the vehicle you’ve purchased.
• No mileage restrictions: One con for leases is the mileage limits, which restrict how many miles you can add to the vehicle. When you own your vehicle, the only mileage restriction is what you want it to be.
• Customization: For some, making their vehicle all their own is important. When you purchase a vehicle, you have the freedom to modify it. When you lease, the dealership still owns the vehicle, and you have to keep the vehicle as it is.

Factors to Consider

Once you know the pros and cons of buying vs leasing, there are a few more factors to consider:

• Financial: What is your budget? How much can you afford for a monthly payment? These are important questions to answer when looking for a new vehicle. While lease payments can be less than a loan payment, both can be affected by interest rates, credit scores, and down payments.
• Driving habits and mileage: will you be able to stay under the mileage restrictions? Mileage is an important part of leasing and can make it more expensive in the end if you go above the mileage restriction. For those who drive far often, buying may be the better option.
• Future car plans: Consider what you’re driving or ownership goals are. Do you want a more long-term vehicle or change vehicles more often? Will your vehicle meet your needs in the next 3-5 years? These are important questions to consider.

Additional Considerations

Other things to consider in the leasing vs buying debate are insurance requirements, maintenance/repair responsibilities, and resale value.

Before deciding whether to buy or lease, check what insurance requirements there are for each option. Car insurance requirements vary from state to state, but they also have different requirements for buying vs leasing. When you lease, you will typically need greater coverage. Of course, that may not be out of your budget depending on how much the monthly payment is compared to when purchasing.

When it comes to maintenance and repair, there can be a difference in requirements. When you lease a vehicle, you will have to maintain the vehicle in good condition. This can mean extra service appointments and costs for things you may normally let slide if you bought the car. If not well maintained, you may have extra charges at the end of the lease term for excess wear-and-tear.

For resale value and depreciation, there is a key difference to consider. While a purchased vehicle will depreciate, you will own it, build equity, and be able to use its cash value as you see fit. If you lease it, you won’t have to deal with future depreciation issues, but you have no equity in the vehicle. When looking at this, consider whether you want to own it or if an almost renting situation would work best for you.

Making the Decision

Once you have all the information, it is time to make a decision. Both options have their pros and cons, and the decision will come down to your needs and goals. When you are ready, Wes Finch is here to help with experienced sales and financing teams to find you your future car.

Check out our new and used vehicles today. See one you like and want to buy? Get pre-approved today here!