Buy vs. Lease a car [infographic]
Similar to buying a home vs. renting an apartment, deciding whether to buy vs. lease a vehicle is a decision with many pros and cons. Lets explore how you can compare both options and steer yourself toward the decision that is right for you. Short and long-term costs
Buying: expect higher monthly payments unless you put down a large down payment or take out a longer-term auto loan. buying typically costs less in the long-run If you keep your car for longer than your auto loan.
Leasing: enjoy lower monthly payments and down payment. If you are always leasing, it costs more in the long-run, but offers a way to drive a nice car for less in the short-term. Ownership options
Buying: you own the car once it’s paid off, which allows you to sell it or keep driving it payment-free
Leasing: once you lease it up, you will return the car to the dealer and either get a new lease on a new car, have an option to buy out the least, or buy a new car. You may also need to make payments at the end of your least to increase the dealer’s residual value. Check the fine print. Mileage restrictions
Buying: when you buy, you own the car, so you can drive as much as you want.
Leasing: you will be locked into driving 12,000-15,000 miles per year on average, or risk having to pay .12 per mile on average to the dealer. Some dealer may offer flexible mileage terms.
Car care responsibilities
Buying: you are responsible for any and all maintenance when you buy a car. You can also opt to buy a warranty for your new or used car. Wear and tear on the car will affect your resale price down the road if you don’t fix issues. You can also customize the car if you wish. Like adding new tires or a custom stereo system.
Leasing: most maintenance issues will be under warranty or happen after your lease is up since the vehicle will be new. If you have excessive wear and tear, like damage from kids, pets or smoking, or dings or dents, the dealer will deduct this from your security deposit when you return the car. Similar to renting an apartment vs. buying a home, you will not be able to customize your vehicle since you won’t own it. Comparing options with your credit score
Below excellent range: may not qualify for a lease, buy a car.
Excellent range: great deals on buying or leasing a car
Buying: the higher your score, the lower your interest rates will be typically. You don’t need excellent credit to qualify, however avoid dealers that specialize in sub-prime credit, as they are known to take advantage of people.
Leasing: you’ll need to be in the excellent credit sore range to get the best rates, but the dealer may charge hidden fees or higher interest rates to account for a lower score.
Ultimately, the decision to buy or lease a car is different for everyone based on your personal circumstances. The key is to consider all of the factors above and decide what is best for you.