To lease vs buy is a hand-wringing decision for some. There are
advantages and disadvantages in each one, there are advantages in leasing that outweigh the advantages in buying. It all probably boils down to your personal preference, what you're happy doing, and what your unique personal situation dictates.
Leasing could be attractive if you have a business where there's some tax advantages to it. Also, if you are young and carefree and enjoy the freedom of going in and out of styles, going in an out of the latest car models and their gadgets, leasing might be the most preferable although not the most practical or cost effective. There are some hidden costs to leasing and if you are not well-versed in them, you might be in for some surprise. Lease vs buy therefore must be looked upon closer.
Owning a car is the most practical thing to do for some people although not the most desirable. You have to contend with the work of selling or trading your old car for a new one at the car dealership. But that's the job of this website. Elsewhere in this website, car buying tips abound and if you read them and become familiar with them, buying another one becomes easier.To lease versus buy car should not be an uncomfortable decision like going to the dentist.
Lease vs buy 'tho becomes less of a dilemma as you read through the advantages and disadvantages of each one, as you become familiar with the intricacies of both.
You cannot afford a large down payment on a new car.
You would like to or need to have a new car every few years.
You would prefer not to deal with maintenance issues.
You don't like to go through the hassle of having to sell or trade your car when you want a new one.
But there are more to this lease vs buy arguments. Here's more advantages to leasing and remember, the perceived advantages are dependent upon your point of view:
As the cost of new vehicles has risen, leasing is more affordable than buying.
Lower salex tax because tax is only paid on the amount of the car's value used, about half the amount of the car's total value over three years - the usual lease term.
You pay less for maintenance. You are usually not responsible for paying for repairs unless you get involved in car accidents which is your responsibility.
Cars depreciate in value and when you drive them out of the dealer lot, it already lost some. When leasing, you are only paying for the depreciation of the value of the car during the lease period.
Buying is the method of choice for most car buyers. Only about 20% of
new-car transactions are leases and consumers are pretty consistent about their buying habits. But the 80% of car buyers are probably right. The lease vs buy argument might go in favor of buying because for the average person, it's the one that makes the most sense.
The problem for the person who leases is that they are subjecting themselves to a life of having to make a car payment every month. They always lease a car to satisfy the craving for driving a car which they can only afford by leasing it. They never stop paying for a car, because they are always leasing or borrowing from someone else. At $350 a month they are shelling out $4,200 a year, every year, maybe for the rest of their lives.
The lease vs buy argument is arguably in favor of buying a car outright. If you bought a car, pay $350 a month (I'm sure that car is a decent, no-frills one) and pay it off in 3 years, let's calculate how much money you would have in the bank if you didn't buy another car for 9 years. (The person who leases had gone through 3 leases during that time and for illustration purposes had been paying the leasing company $350 per month for 9 years).
If the buyer, who was paying $350 in payments, put that amount instead in an account that yields 6% a year for 9 years, his money would have grown to $49,958.00. Almost 50 grand. You can make the argument that the guy who kept his car would be paying for repairs and such but if he spends $1,500 on repairs per year, that would be $13,500 in 9 years. Subtract that amount from 50 grand and we see that the buyer has a fat $36,500 sitting in his account while the person who leases has zilch, nada, zero.
Lease vs buy
, which is better? As the example above illustrates, buying a car, instead of leasing makes sense.