facebook twitter instagram linkedin google youtube vimeo tumblr yelp rss email podcast blog external search brokercheck brokercheck
%POST_TITLE% Thumbnail

Buying vs. Leasing a New Car


Written by: Daniel Kukainis

8/20/18


Deciding between buying and leasing a car can have an impact on your budget and overall financial plan.   Buying a car is often the better choice long term after weighing out all of the factors.  However, there are many different benefits and drawbacks on either side, so leasing a car could very well be the better choice for you.  The key is understanding what you are getting into and factoring in the points below into your decision.


Buying a Car

Advantages

-No mileage restriction.

-After your loan is paid off there are no more car payments.
     -Typical auto loan is 5 years.

-Customize your car however you wish.
     -Don’t have to worry about excess tear fees.

-The car becomes your asset and improves your net worth.
     -You have the ability to sell your car, albeit at a depreciated value, whenever you’d like.


Disadvantages

-Your car instantly depreciates $2k-$5k after purchasing off the lot.
     -Your car will also depreciate in value each year.
          -Avoid brands that have cars with a low resale value – check used cars online of the same model to see how they have depreciated.

-Higher monthly payment than a lease, depending on how much money you put down on the car.

-Your sales tax will be much higher than if you were to lease a car.

-Features will become quickly outdated with the rapid development of technology in car manufacturers each year.



Leasing a Car

Advantages

-Pay less money up front.

-Lower monthly payments.

-Lower maintenance costs.

-Latest technology and safety features.

-You may be able to have your mile overage forgiven if you enter into a new lease or wind up purchasing the car.

-You may be able to write off the expense if you are a Small Business Owner.


Disadvantages

-Mileage restrictions – typically 10k/year.  You can get a higher restriction, but this will increase your monthly payments.
     -Dealers usually charge around 25 cents per mile over your limit.

-Higher car insurance payments.

-Limitation on customization.

-You will always have a car payment.
     -Every 2-3 years you usually have to put a down payment on another lease.