To Lease or To Buy, That is the Question
Trying to decide between buying or leasing your next car? Take a look at the following . . .
Ownership
When leasing a car, you are essentially renting it for a long period of time. You must return it at the end of the lease unless you choose to buy it at that time. If you buy your vehicle, you own it and may keep it for as long as you like.
A new car lease is a binding contract, however you may exit your lease if you can find someone to take it over, assuming the bank approves. There are some fantastic online services catering specifically to people interested in exiting and assuming leases, listed below.
Monthly Payments
When leasing, your monthly lease payments are generally lower than monthly car payments. Why? Because you are only paying for the vehicle's depreciation, plus dealer charges and other fees. When buying your car, your monthly payments are higher because in addition to the items above, you are paying for the entire purchase price of the vehicle, and not just it's depreciated value.
Mileage
Most car leases specifically limit the number of miles you may drive per year. Most allow between 12,000 and 15,000 miles. You will likely pay charges if you exceed the amount for your vehicle, usually 10 to 15 cents per mile. It is also possible to negotiate a higher mileage limit - and pay a higher monthly payment. If you purchase your car, you may drive as many miles as you want, so this limitation applies specifically to leasing and not to buying.
Excess Wear
Most car leases limit the amount of wear to the vehicle during the term of the lease. If you exceed the limits you would likely have to pay extra charges. If you own the car, you may treat it however you like. However, excessive wear (like excessive miles) will lower the resale value of your car.
Intangibles
Consider how long you would like to keep your new vehicle before investing in another new or used car. If you're fairly certain that you will be keeping your car for a while, then leasing may not be the best option. However, leasing does provide flexibility for the unsure in that it provides an extended "test-drive" period with an option to buy at the end. If you are the type who likes a new car every few years, and you don't want to be burdened with car ownership, or the need to sell a car, then leasing may be a better option for you.
If you're still not sure which side of the buying vs. leasing debate you fall on, you might try requesting quotes for both, and compare the payments. That way, you'll have a better grasp on whether it'd be better worth your while to lease or to buy your next new car.
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