To Lease or Not to Lease...That is The Question
It feels like an age-old question, and it is likely that every person you know has an opinion on it - to lease or not to lease? The decision to lease or buy will of course depend on your own unique circumstances, but there are definitely some general pros and cons to both.
For someone who is deciding to lease a car, here are some of the pros and cons. When it comes to cost, a lease will be less expensive in the short-term because of lower monthly payments. The manufacturer also assumes all of the risk when it comes to the vehicle’s depreciation. Leasing also ensures that you are driving an up-to-date vehicle with the latest safety features.
Now let’s discuss some of the cons of leasing. Cost-wise, you are ultimately going to be paying more for the leased car in the long-run because your lease period happens to be the timeline for when the car is most rapidly depreciating. Another stipulation of lease contracts that doesn’t fit into everyone's lifestyle is the limited mileage allowance. If you go over the allotted mileage agreed to in your lease, then you will be charged additional fees.
Next, let’s take a look at some of the pros and cons of buying a car instead. If you are able to buy your car outright, whether with cash, and/or a trade/in, then you will not have to make monthly payments on your vehicle. If that isn’t the case, and you decide to buy a car with financing, your monthly payments will still help you build equity, which will help to pay for your next vehicle. When you buy a car you aren’t beholden to mileage limits, and you can buy or sell whenever you want.
Buying a vehicle isn’t the best option for everyone, so let’s discuss some of the cons. Depending on your trade-in or down payment, buying a car can mean that your monthly payments are higher than if you were leasing. The future value of your vehicle is unknown, and you are the one who assumes the depreciation risk. Finally, you are at the mercy of the manufacturer warranty on your car. When it ends, you will have to pay for repairs out-of-pocket, so you will need to plan for unexpected costs associated with your vehicle.
When it comes down to it, the decision to buy or lease a car will be dependent on your individual situation, and not what has worked best for someone else.