Buying or leasing, it's an age-old debate and is probably one of the most controversial topics frequently discussed in automotive and financial circles. "You Need To Buy! It's the only sensible choice" or "Only Idiots would buy a vehicle, leasing it is the way to go!" are probably phrases you've heard in your life. It's unfortunate that people are so polarized over leasing or buying a vehicle when the truth is a little more complex than that.
For some people, leasing or buying is strictly a matter of money. For others, it's more about their connection to their vehicle. Either way, you will be in this vehicle for potentially years, so it's essential to take some time to make sure you pick the option that is right for you.
Buying vs. Leasing a Car
Leasing a vehicle is essentially renting it from a dealer for a predetermined amount of time. Then, when your lease period ends, you have the option of returning or purchasing your trusty vehicle. (For a predetermined amount, of course!)
Buying a vehicle means that you skip the rental period and hop straight into ownership and all of the expenses that go along with that.
Leases generally have a determined number of miles you can drive annually. Most leases come with a 10,000-mile yearly allowance. The monthly payment will go up slightly if you end up driving more than your yearly allotment. If you drive more than the mileage limit in the contract, you'll owe cash for every extra mile when your lease ends. However, the monthly payments for a lease are usually lower than it would be for you to get a purchase loan on it. You aren't building any equity in the vehicle, though, which is why generally, the rule of thumb is to buy a cheap car and lease an expensive one. The depreciation that would hit an expensive vehicle could overcome any equity you might have otherwise built if you purchased it.
Plus, you can buy the vehicle at the end of your lease for the pre-arranged price. This is determined by Residual Value and is essentially how much the vehicle is worth at the end of your lease agreement with depreciation taken into account.
When you lease a vehicle, you might have to put some money down. The more you put down, the cheaper your monthly lease payment will be. Keep your eyes open, though, because often, manufacturers will discount leases to try to move unsold inventory. You might be able to get a great deal with an incentive that makes leasing a no-brainer!
If you are interested in learning more about our current leases, click here to see what is currently available for our dealership! It may not make financial sense to put a lot of cash down on a vehicle that you will hand back to the dealer. But, on the other hand, if you're pretty sure you're going to keep the vehicle when the lease expires, it will save you money at that point. Leasing also gives you the opportunity to spring for a more luxurious car than you would otherwise be able to afford! The payments on leases are usually considerably less expensive than purchasing.
The biggest disadvantage to leasing vs. buying is that you don't acquire any equity in the vehicle. It's much like renting an apartment. You make the monthly payments but have no claims to ownership. This can hurt future vehicle purchases because you won't have a trade-in to reduce the cost of the next one. For lots of people, there isn't any feeling in the world like cruising off the lot with that new car smell. If that sounds like you, leasing could very well be the way to go.
Another big advantage to leasing is that you often get a warranty that lasts the entire length of your lease. Meaning most of your repairs should be covered, thereby largely reducing the risks of significant vehicle repairs.
There are also tax considerations. Are you using your vehicle for business purposes? Leasing will often give you more tax write-offs than a loan would. That's because you are allowed to deduct both the depreciation and financing costs for each monthly payment. However, remember that leasing luxury automobiles generally limit how much you are allowed to write off.
There are many benefits and drawbacks to both leasing a vehicle and buying a vehicle. However, you need to let your lifestyle determine which is the best choice for you. Obviously, the issue is a bit more complicated than a blanket 'Do' or 'Don't' for your situation. Are you feeling a bit overwhelmed? Don't stress about it, our friendly staff of vehicle sales specialists is waiting by to help you talk through the decision. They can give you real numbers on leasing vs. buying and help you through every step of the way. From finding the perfect vehicle to financing your way off the lot with it.
Feel free to reach out to us at any time, or start by shopping our inventory below!
