Car Buying or Leasing: Benefits and Disadvantages

So, you want a new car, but you are unsure of whether car buying or leasing is the right choice. As with most anything, there are advantages and disadvantages to both. Use this article as a guide to help you make your decision.

The main benefit of buying a car is actually owning the vehicle. When you own the vehicle, you are free to do with it as you choose, and you can drive it as much as you want, keep it for as long as you want or sell it whenever you want. Once a buyer finishes paying for the car's financing (typically 4 to 6 years), he or she will also be free from making monthly car payments.

The freedom of owning a vehicle does come at a cost, though. Monthly payments for a purchased car are usually higher than monthly payments for a leased car. A buyer will also typically have to pay a hefty sum of cash as a down payment to initiate the purchase. A potential buyer should also consider the depreciation of the value of a car. The older a car gets and the more miles it's driven the less valuable it becomes. Someone looking to sell his or her car in the future has to think about how much the vehicle may depreciate over time and determine how much that depreciation will affect his or her wallet in the long-run.

If you are looking to save some money in the short-term and you do not plan to put a large amount of miles on your car, leasing certainly has some great benefits. With a lease, there is usually no down payment required, and the monthly payments should be lower than those of a purchased vehicle. After the lease term is completed, which is usually 2 to 4 years, you immediately have the option of leasing a new vehicle. Someone who leases also does not risk taking the full brunt of a car's depreciation. When you lease, you only pay for the vehicle's depreciation over the lease term, which is usually much shorter than the time you'd continue to own a car you've purchased.

Although leasing a car has its benefits, it also has some very real disadvantages. The most obvious disadvantage of a lease is paying for a vehicle that you do not own. Someone who leases pays the monthly payments to use the car for the allotted time, and then has to give it back. If you lease, you will always have to make monthly payments, and you will not have the option of selling your car. Under a lease, you will also be subject to a mileage restriction. Most leases restrict yearly mileage to around 12,000 to 15,000 miles. If you go over the mileage allowed, you will be forced to pay overage fees (around 15 to 30 cents per extra mile).

Car buying and leasing are different means to driving the car of your choice. Neither option is for everybody, so you must carefully think about your specific situation. If you take the time to consider how each option will affect you, you should be able to make the right decision.