If you’re preparing to get your first vehicle, you might be wondering whether leasing or buying is a better option. Ultimately, the answer depends on your goals and situation. To help you make a decision, we’re going to explore the advantages and disadvantages of leasing and buying a vehicle.
Leasing a Vehicle
Leasing a vehicle can be an excellent option for many. Leasing generally means you’ll have a lower monthly car note since you’re not paying back the principal balance. Instead, you will be borrowing and paying back the difference between the car’s value and the car’s expected value when the vehicle is returned to the dealership.
Advantages of Leasing
- Leasing means you get to drive the latest model of a vehicle covered by the manufacturer’s warranty.
- Leasing is a great option for buyers who want access to more features and trims that they otherwise wouldn’t be able to afford.
- You don’t need to worry about the car’s value fluctuating when you’re ready to move on.
Disadvantages of Leasing
- If you constantly lease one vehicle after the next, this means you’ll never be able to own your vehicle and will always have a car note.
- Leasing can be restrictive as lease contracts specify a certain number of miles you can’t surpass before your contract ends.
- If the vehicle doesn’t remain in good condition, you’ll be responsible to pay excess wear and tear charges.
Buying a Vehicle
Buying a vehicle is a relatively simple process. It involves obtaining a loan from a bank, credit union, or another lending institution. One portion of your payment will go to interest while the other portion is reserved for the principal.
Advantages of Buying
- Buying means you don’t have to deal with any mileage restrictions.
- Buying a vehicle gives you an opportunity to own the vehicle, meaning you won’t have to pay a car note forever.
- You can sell or trade-in the vehicle
Disadvantages of Buying
- When buying a vehicle, you will typically have a higher monthly payment.
- Buying generally requires a larger down payment compared to leasing.
- There are long-term maintenance costs associated with buying a vehicle.
Leasing vs. Buying: Which Should You Choose?
There is no right or wrong answer when it comes to leasing or buying. Ultimately, buyers will have to prioritize what’s most important to them to determine which option will suit their needs.
With that said, leasing is a great option if you want to always be in the latest vehicle, want to maintain a low car note, and don’t mind staying within a certain number of miles.
On the other hand, buying is the best option if you plan to do a lot of traveling and prefer the freedom and potential profit that comes with owning a vehicle.