To buy or to lease, that is the question. With cars being among the most expensive purchases that consumers make in life, it’s important to make the right choice regarding how to pay for a new car.
In deciding on the best option for you, it really depends on your individual lifestyle and priorities. The perfect option for you can be totally wrong for someone else.
First off, let’s consider how a lease differs from financing. When you lease a vehicle, in effect you are paying for your “use” of the car. You don’t own it; rather you get exclusive rights to use the car for a predetermined period of time. Leasing has a number of cumbersome restrictions, not the least of which is that it can be very difficult to get out of or transfer a lease. Generally, once you’re in a lease, you’re in it for the entire term.
Financing, on the other hand, allows you full ownership of the car, once you have completed all the payments. There are no restrictions on how you use the car, on how many miles you can drive it, or on how long you may keep it.
Therefore, if you want lower monthly payments, like having a car that has the latest technology and safety features and is always under warranty, don’t like trading and selling used cars, and properly maintain your vehicle, then an auto lease is the better choice for you.
However, if you don’t mind higher monthly payments, prefer to build up some trade-in or resale value, are more comfortable ending up with outright ownership, like paying off your loan to be payment-free for a while, don’t mind the unexpected cost of repairs after the warranty has expired, and don’t like the risk of surprise lease-end charges, then financing an auto is your answer.