Your Next New Car: Buy or Lease?

A long term finance or a similar monthly payment on a new car? Either way, both may end up costing you the same amount of money. However, it really comes down to life choice when you consider that your monthly payment for money down on a new car purchase vs. leasing a new car will be almost the same.

If you can’t afford the payment on the new vehicle you desire, leasing it might make it possible for you to be behind the wheel much faster.

Here are seven tips to help you decide whether to buy or lease your next vehicle…

1. Are you hard on your vehicles?

If you plan to use this vehicle for work or if you tend to damage vehicles (or trucks) in your day-to-day driving life, you may consider leasing as if you buy, you’ll be making permanent payments on a vehicle that’s wearing out.

2. How long do you keep your cars?

Here, I’m talking about your vehicle trade cycle history—for instance if you tend to keep cars long term, (i.e., 5 years or more), consider buying and you’ll end up paying less per year that way. However, if you keep cars for less than 5 years (i.e., because you like to trade up for a new model) it will be cheaper and simpler to lease a car and trade it in for a new one every 2-3 years.

3. Is cost an issue?

For instance, price out all monthly costs side by side when it comes to leasing vs. buying (including payments and up front charges, which you’ll pay with a vehicle purchase but not a lease).

4. Is new important?

You can save quite a bit of money and own a car outright if you don’t need to be driving a brand new vehicle. If the car has been well cared for, you’ll pay less than you would by leasing and still get many years from the vehicle. However, if you’re in a sales job (i.e., real estate) where your image is vital, a new leased car may be a better option for your career.

5. Do you need to keep insurance costs down?

Typically, it’s cheaper to insure a quality, used vehicle than it is to insure a brand new purchased and leased vehicle.

6. Do you commute?

With a lease, you’ll always pay for mileage put on the car during its ownership so if you commute long distances to work or travel out of town a lot, buying a car might be a cheaper option in the long run.

7. Is a warranty important?

A new buy or even a used car buy has a ceiling to the warranty (and that used car’s guarantee might actually already be expired). With a leased vehicle all of (or most of, depending on contract) maintenance is taken care of under the lease contract.