Quick notes

  • Leasing a new car comes with many benefits, like lower monthly payments and fewer repair expenses.
  • When you buy a car, you build equity and get to drive it as much as you want.
  • The decision to lease or buy will come down to what you need from your vehicle.

If you’re in the market for a new car, you’ve probably done your research when it comes to the model and even the color of the car you’re looking for. Then comes the question: to buy or to lease? While both methods of acquiring a vehicle have their pros and cons, it’s important to understand what your short term and long term goals are when it comes to your vehicle.

To lease or not to lease

Today, nearly half of consumers think buying a vehicle outright is too expensive. With most new car prices exceeding $30,000, it’s no wonder why people aren’t too keen on purchasing a new vehicle. Instead of purchasing, many are looking to lease their new car.

When you lease a car, you rent it for a specific duration of time or mileage without needing to be approved for a loan. Your monthly payments are determined by how much your car is expected to depreciate during the term of the lease. Leasing a car comes with an array of benefits, such as lower monthly payments than what you would pay if you bought the car.

You won’t need to go through the tedious process of selling your vehicle when you lease, and you’ll likely be riding in newer models if you consistently lease.

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However, leasing does have some drawbacks. First, you’re renting a car instead of putting monthly payments toward ownership. Also, if you exceed the mileage in the lease agreement, you will be charged a sometimes considerable fee when you return the vehicle. At the end of the day, you’re paying to rent this car  – not to own it.

The pros and cons of buying

The main perk of financing or purchasing a car versus leasing is equity. When you submit your monthly payment, you’re building more and equity and turning your financing into car ownership. This may be valuable if you want to trade in your car for a better option in the future.

Another benefit of buying a car is flexibility. When you buy, you don’t have a mileage limit. Therefore, you can drive your car as much as you want. You can also upgrade your car with personalizations and other accessories. Often times, this option is not available for leased vehicles. You can also trade-in or sell your car whenever you want instead of being committed to a fixed lease term.

The main perk of financing or purchasing a car versus leasing is equity. When you submit your monthly payment, you’re building more and equity and turning your financing into car ownership. This may be valuable if you want to trade in your car for a better option in the future.

At the end of the day, the decision to buy or lease a car comes down to what you value. Buying a car is a great way to establish equity while leasing a vehicle is a good option for those who want less commitment and lower monthly payments.

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