Best Choice? Lease Or Buy A Car

Deciding to lease or buy a car depends on your need for the car and the type of use you have for it as a driver. Lease options can be available for both new and used cars and the factors that determine which is better come down to your needs.
 
Period of Time You Want the Car
If you plan to keep a car for a period that is longer than 5 years and do not have a desire to change cars every several years, a purchase would be in your better interest versus a vehicle lease. Owning the car gives you ability to make changes and modifications that you do not have the ability to do with a lease car. As a lessee, you are using the vehicle under certain conditions and mileage restrictions. Owning the car frees you of those restrictions but at the cost of ownership. The depreciation expense is borne by the owner and is an expense you carry when you buy the car.

Amount of Down Payment
The amount of money that you have to put down on the car determines whether a lease or purchase option is better. A large down payment and the ability to make payments over a long period of time make buying a more appropriate option. Leasing is attractive for those who do not have a lot of money to put down and want to make a limited number of payments.

The amount of down payment will influence the cost of a lease or the finance agreement for purchase. A larger down payment will make the payments lower over time, which is desired by a car owner. A smaller or no down payment would be encouraged by a lessee since their desire is to return the car at the end of the lease. If the lessee chooses to keep the car, the down payment would be required then.

Mileage Considerations
Leases have limits on the number of miles that can be driven in a year, usually up to 12,000 or 15,000. More miles may be purchased at a cost but if your driving needs do not exceed the limit, leasing is more advantageous than buying. With a lease however, you have a requirement to fulfill the terms of the lease for the term whereby with a purchase, you can sell the car any time you like.

Depreciation Expense
Buying a car means that the depreciation expense is yours the minute you drive the car off the lot. This expense is taken on each year you own the vehicle and is something that you will have until you sell the car or its value equals $0. This is a cost of ownership that is not taken on by a lessee. The lease is owned by the lender or dealer and the cost for depreciation is their expense. This is why mileage restrictions are in place to keep mileage low and increase the resale value of the car when the lease is up.

Breaking down the difference between leasing and buying a car shows the great distinctions. You'll know based on the above if it's a proper situation to lease or buy a car.