If you're in the market for a new vehicle and can't decide whether you should lease or buy, we're here to help. We've put together some information to help you make an informed decision on what works best for you.
Buying
Pros
- You own the vehicle. When you lease a vehicle you're just borrowing it for a limited amount of time. If you buy the vehicle after a few years of payments you own the vehicle outright.
- You can make whatever modifications you want to the vehicle. Want to add some tint? Go for it!
- No mileage limits. Feel free to rack up the miles in your vehicle without fear of penalty.
- More cost-effective in the long run. When your lease is over you either have to lease another vehicle or pay the difference to keep the lease you currently have.
- Sell the vehicle at any time. If you purchase a vehicle and for some reason no longer want it, you can sell it.
Cons
- Higher down payment. You're usually asked to put down a 10% to 20% down payment.
- Higher monthly payments. Financing includes down payment amount and APR. Depending on your credit score, your APR could be low or high. Leases don't use these percentage rates on vehicle price so payment can sometimes be hundreds of dollars lower.
- You are responsible for maintenance. If you lease a vehicle, you'll more than likely return in before you face any major maintenance costs.
- Depreciation. Your vehicle depreciates as soon as you drive off the lot.
- You are responsible for trading in or reselling your vehicle. When you decide to get a new vehicle you have to handle the resale yourself.
Leasing
Pros
- Lower monthly payments, especially if you get a lease special.
- Lower down payment. You typically won't have to make a down payment but sometimes drive off fees are required.
- You can have the most up-to-date vehicles. You can trade your lease in every few years and get something new.
- The future price of your vehicle is set. As part of the agreement the price is predicted and added to your lease agreement.
Cons
- If you have poor credit leasing may be difficult. Since leases don't have an APR there is less flexibility to cover the risks of a person with a low credit score.
- You don't own the vehicle after the lease. You'll either need to purchase the vehicle outright or lease another vehicle.
- You have limited mileage. Most leases are limited to 10,000 to 12,000 miles a year. If you go over, you will probably incur additional fees.
- Leasing can be more expensive. Over time, you will end up spending more money when you lease repeatedly.
- If you decide to end your lease early you will be charged an expensive penalty.
