For individuals who are in the market for their next car, a common question comes up: is leasing a car better than buying it?
When you’re leasing a car, you are renting it from the car dealership for a specific period. Buying it outright means you own the vehicle once the loan is paid off.
Both leasing and buying have pros and cons. So, before deciding on which road to go down, it is imperative to understand the key differences between both options.
In this article, we have put together key information you need to know as well as the advantages and disadvantages when you lease or buy a vehicle to help you decide which option is best for you.
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How Buying and Leasing Differ
Cars are downright expensive. Not surprisingly, buying a car is one of the biggest buying decisions that individuals or families can make.
That said, leasing and buying cars through loans are two of the common ways of how individuals can finance a vehicle.
Purchasing a car is similar to buying a home. If paying in full cash isn’t an option, then paying the down payment and taking out a loan is an option. The lender holds the title until you have paid out the loan completely, and when you want to move, then you can sell your house.
However, while a home’s value typically increases, your car’s value will depreciate over time. As such, depending on circumstances, leasing a car can be more attractive.
When you’re leasing a car, it’s like you are renting it out from the car dealership for a specific length of time, typically from 36 to 48 months.
At the end of your agreed lease period, you have the option to return the car to the dealer or purchase it at a set amount as defined in the lease contract.
Leasing vs. Buying a Car: Which Is the Better Deal?
The main difference between buying and leasing a car is ownership. Buying the vehicle outright means you are going to own it after the loan is paid off, whereas leasing a car only gives you temporary ownership with set limitations on what you can do with the vehicle.
Having said that, there is no easy answer to the question of whether it’s better to lease a car or buy it. Both buying and leasing cars have their benefits and drawbacks. The key is finding out which of those benefits matter the most to you.
Buying a car is expensive, but at the end of the day, you’ll own the car. Any equity you get from the vehicle can be used toward a down payment when you want to purchase a new vehicle.
With car leasing, you will usually get cheaper monthly payments, and it allows you to replace your vehicle every few years while maintaining relatively low monthly payments.
However, lease customers are subject to strict mileage limits and must keep their leased car in good