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10 Feb Should You Buy or Lease Your Next Vehicle?

Posted at 15:34h by Madison Perrin 0 Comments

A new vehicle can be one of the biggest financial expenses you face, which is why you must explore your options before you make your final decision. When you break it down, there are really only two routes you can take: buy or lease. So the question is, which option better suits your lifestyle?

The truth is, there are advantages and disadvantages to both buying and leasing a vehicle. And, the answer is going to be different for everyone, so let’s explore a few pros and cons for each option.

Advantages of buying:

  • You can modify your vehicle as you please
  • There are no mileage limitations or overage fees
  • You can sell your vehicle whenever you want
  • It is more economical over time
  • You may keep the vehicle for as long as you want

Disadvantages of buying:

  • You are required to pay for maintenance costs once your warranty runs out
  • Your down payment will be much higher
  • Monthly payments are higher
  • You are responsible for selling the vehicle, or going through the trade-in process when you are ready for a new vehicle

Advantages of leasing:

  • Lower monthly payments with a low – or no – down payment.
  • You can drive a more luxurious vehicle for less money
  • There are no selling/trade-in hassles to worry about
  • You get a new model every 2-4 years
  • You pay less sales tax
  • You don’t pay for regular maintenance
  • The future value of the vehicle doesn’t affect you financially

Disadvantages of leasing:

  • You don’t own the vehicle, even though you’re paying money towards it
  • Your mileage is limited, and if you go over, you face overage fees
  • It is expensive to terminate a lease- almost as expensive as finishing the lease
  • Leasing equals more money spent in the long run (because you never pay off the vehicle)
  • Lease contracts can be confusing
  • Excessive wear-and-tear on your vehicle can translate to extra fees 

The most obvious, and maybe most exciting, difference between buying and leasing a vehicle is that when you lease, you get a new model every 2-4 years. Who doesn’t want a new vehicle every few years? And, when those years are up, you don’t have to deal with the hassle of selling your vehicle. Instead, you just swap with the dealership for a new model.

The most obvious advantage to owning the vehicle you drive is that, well, you own it. Because it’s yours, you can modify the vehicle as you please and you don’t have to worry about any mileage restrictions or fees.

Overall, leasing a vehicle is a much more carefree route to take that allows you frequent upgrades. Buying your vehicle can be more economically sound, and allows you the freedom to do what you wish with the vehicle. When you lease, you are only paying for the value of the vehicle while you drive it, instead of buying and owning the entire worth of the vehicle, even when it depreciates. So, if you have a little less money to put down and spend every month and are okay with mileage restrictions, leasing a vehicle may work better for you. If you are able to put more money down up front, are interested in having total freedom over the vehicle you drive and don’t mind the maintenance costs, purchasing a vehicle would be best for you.

One caveat:  If you are buying or leasing through your business, you should consult your tax accountant before choosing, as the expensing between the two may differ and impact your choice.

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