Car Leasing vs. Buying: Benefits of Each Option

Many consumers have a difficult time deciding on car leasing vs. buying. There are distinct benefits related to each option. As with all things related to automobiles, the best option comes down to your own driving habits and personal preferences.

Leasing a vehicle will generally require an initial lump sum payment, but the monthly payments are usually much lower than they would be for a purchaser of the same vehicle. Because of the lower payments, the risk of default is lower and therefore most people can lease a nicer car than they can buy. It is normally easier to get approved for a lease than to get approved for a loan on the same vehicle. Maintenance is less of a concern for lessees than buyers, because a new car will almost invariably be covered by the factory warranty for the entire duration of the lease. Additionally, leasing a car every 2 or 3 years allows the lessee to constantly drive a new or fairly new vehicle. For many people, this is appealing. As long as you take care of the car and stay below the pre-determined mileage limit, leasing should not be particularly stressful. Additionally, leasing eliminates the depreciation factor which can be a major concern when buying a car.

Ownership also has appealing benefits. For one, while the payments related to buying a car are generally higher than leasing, each payment builds up equity. Many people like to know that they are paying to own the vehicle rather than paying to use it. The ability to sell your vehicle whenever you choose is another positive; a lessee has to keep their car over the term of the lease or they will generally face stiff penalties for breaking the agreement. Owning a car also means not having to worry about the lessor telling you how many miles you can drive or what you can use the vehicle for. Additionally, buyers are able to use the vehicle well after the final payment has been made. For people who do not feel the need to constantly be driving a new vehicle, ownership is almost always preferable. In the long run, purchasing a car and keeping it for an extended period of time is almost always less expensive than perpetually leasing similar vehicles. Buying also means avoiding the hassle of turning in your car every few years and having to repeatedly go through the process of selecting a new vehicle and dealing with the financial process.

Leasing may be preferable to people who want lower monthly payments, who enjoy driving a newer car at all times or who may want to drive something a little fancier than what they could afford to buy. Purchasing is usually less expensive in the long run, provides greater freedom and gives the owner an asset that can be sold for cash. Consider which benefits you value most before deciding whether to purchase or lease your next vehicle.