Do you ever wonder if it’s better to lease a car or buy a car? Many people do, and we want to walk you through the pros and cons of both options to give you a better idea of what is best for you.

 

When Leasing a Car is Better than Buying

When choosing to buy or lease a car, it generally comes down to what your priorities are as a buyer or renter. Leasing a car can offer lower monthly payments, but it is similar to renting vs. buying a house. You will be spending money paying for a vehicle without receiving the investment of ownership, but you get the benefit of worry-free maintenance with most repairs being covered under a new car warranty. You also never take on the responsibility of a depreciating asset, and instead can upgrade every few years! Leasing can however result in a cycle where you never stop paying for a vehicle, being that the lower payments are appealing—though you can choose to purchase the car at the end of your lease to keep your investment. 

 

Lease payments will depend on many factors including sale price, length of the lease, expected mileage, residual value (depreciation or the value of the vehicle at the end of the lease), rent charge, and taxes and fees. But all of these things can be discussed with your dealer at the time of purchase. 

 

There are a number of converging trends that have changed the way we lease over the past several years. For decades, only a majority of luxury cars were leased—but now, more compact cars, sedans, and SUVs can be found in the leasing market with affordable rates and deals that make great financial sense for many car leasers. 

 

Keep in mind—if you choose to end your lease early, it can be just as costly as sticking with the contract. On the plus side, you will never be affected by the vehicle’s value when you trade it in—excluding excessive wear and tear or exceeding the mileage limits established in your contract. It is also becoming common for car loans to stretch out for seven to ten years in order to keep the monthly payment lower for the buyer. In this case, buyers may be better off leasing a new vehicle for 2-3 years in order to receive more bang for their buck (and getting to drive a new car every few years!). 

 

When Buying a Car is Better than Leasing

Buying a car can involve higher monthly costs, but it results in a valuable investment in car ownership in the end. When you purchase a vehicle, you can think of every monthly payment as an investment in your future and something you can sell one day to purchase something else. 

 

You can also easily sell or trade-in your vehicle at any time if you are buying a car—and use the money from the sale to pay off the loan balance. You are never locked into a car of any make or model. Upgrades and trade-ins are always an option! 

 

Buying a car makes the most financial sense when you are looking at it from an insurance aspect as well. The annual insurance cost for a leased car can be higher than the car you buy depending on a variety of factors. If a dealership is offering 0% financing (which many are right now!), and if you plan on driving the car for an extended period of time—then buying might be the right choice for you. 

 

We can help you do both.

Deciding between leasing or buying a new or used car can be a tough decision to make on your own. But we’re here to help. Stop into the showroom (virtually or in-person) today, and we’ll get you set up with the car of your dreams—to lease or to buy. We’ll walk you through all the steps necessary to make the best financial decision for you and your family.

 

Stay safe, and we’ll see you soon. 

 

- Bob Penkhus VW

 
Categories: Finance