Leasing vs. Buying a Car: Which Is Smarter?

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The advantages of leasing a car are pretty straightforward. Here are the two most significant benefits of leasing instead of buying a car.

Leasing a Car: Pros

Many people opt to lease a vehicle because a lease payment is typically lower than the monthly payment to finance the same car.

Lower Monthly Payments Than Financing

As the lessee, you are renting a new car from the dealership. Typically you lease the vehicle for a term of 24 or 36 months. Therefore, driving a leased vehicle allows you to drive a new, reliable car with the latest safety features.

Always Drive a New Car

There are clear downsides to leasing as well. Some of these factors may cause your lease costs to skyrocket. Therefore, it's necessary to consider your monthly household budget to determine your best option, whether you make $40,000 a year or $100,000 a year.

Leasing a Car: Cons

Unlike those who buy a car outright, those who lease a car will always have a car payment to make. High car payments can wreak havoc on a household budget and make it difficult to get ahead with your finances.

Always Have a Car Payment

When your lease ends, you have three choices: trade your vehicle for another lease, walk away after returning the car or purchase the vehicle you've been leasing.

Lease Buyout Price May Be Higher Than Car Value

Buying a car has some significant pros and cons. Weighing all your options will allow you to decide whether you should lease or purchase.

Buying a Car: Pros

An obvious benefit of buying a car is that you own it. Since you don't have to return the vehicle at the end of a specified period of time, you can keep it as long as you would like. You don't need to worry about paying acquisition and disposition fees or extra money for minor scratches or dings.

You Own It

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