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Lease or Buy a Car – Which One is Best?

Lease or Buy a Car – Which One is Best?

Have you been wondering whether to buy or lease a vehicle? Many people tend to get confused about which option is better for them. 

While both are good ideas, one is ultimately better for you depending on your financial situation. If you want to know more about whether to lease or buy a car, keep reading!

Leasing A Car 

Leasing a car is essentially renting it. You and the dealer will decide the lease duration and any other specifications of the agreement right off the bat, and then you will be able to use the car. 

Every month, you will pay the dealer a certain amount of money, much like paying rent. When the time period is up, you either return the car back to the dealer or buy it for a fixed price. The fixed price takes into account all your leased payments as well.

Advantages of Leasing

  • Gives you access to cars you cannot afford
  • Cheaper than making a purchase
  • Savings on maintenance costs due to warranties
  • Easier to stick to a budget
  • No hassle when it comes to getting rid of it
  • Tax advantages for businesses

Disadvantages of Leasing

  • No eventual ownership 
  • Cannot make any changes to the vehicle
  • Hidden fees if there is wear and tear
  • Mileage limits

Buying A Car 

Buying a car means purchasing a vehicle so that you have full ownership. You may choose to buy a car with monthly payments. However, in this case, you only have full ownership once it is paid off.

Advantages of Buying

  • Complete ownership
  • Power to sell it
  • Ability to make modifications
  • No mileage restrictions
  • Relatively cheaper insurance 

Disadvantages of Buying 

  • More expensive monthly payments
  • Maintenance costs 
  • Uncertain resale value
  • Expensive down payments

Comparing Leasing and Buying

Now that you know the general pros and cons of both leasing and buying a car, let’s compare the two in detail to see which is better.

Which One Is Cheaper?

Leasing a car costs less in terms of monthly payments than buying. If your budget is smaller, leasing a vehicle would be the better option. Since new cars are leased, they come with warranties that oftentimes go beyond the lease period. This means no maintenance costs will be incurred by you. 

However, if the leased vehicle is returned in an unsatisfactory state, you are liable to pay damages.

Which One Is Better for Families?

Buying a car is a better option for families because the car will be an asset for you. If you are ever in dire need of money, you can easily sell your car. The same cannot be said for a leased car. 

Also, if your children were to draw on or damage a leased car, you would be forced to pay hefty charges before returning it. 

Which One Is Better in the Long Run?

Buying a car is better in the long run solely because you end up having ownership of the vehicle, which becomes an asset to you. 

While leasing is a more attractive option, it is not a viable one in the long run. Especially if you plan to settle down with a family. 

Summing Up

There is no set answer for whether to lease or buy a car. Ultimately, it all depends on you. If you would rather drive the newest car and are not too worried about not owning it in the end, go for a lease. If proprietorship is more important to you, then buy a car.

Related Reading: How to Get in Shape on a Budget