Buying versus Leasing

[Cantwingrr]

So I've recently turned my eyes onto the car market, looking to get something nicer for myself. Knowing very little about this kind of stuff, can anyone suggest or give advice on the pros and cons of buying a car versus leasing it?

[Hooked]

If I owned a business that used company vehicles I would lease for tax purposes. I don't really see any benefit to the average person to lease a vehicle. One of the people I worked with leased a truck, he put like 10000 miles more than he was allowed under contract and ended up having to pay a big fine when he returned it.

[chrisberb]

I know this might not sound very nice...but unless you're the type of person who is obsessed with having a new(er) vehicle every few years, you're def better off buying/ financing a vehicle. Lease can sound nice because the payments themselves are low (but the down payment may be moderate), and they generally cover all maintenance, but at the end you don't own anything. It's like renting an apartment for $1200 a month vs a mortgage of $1400 a month.

[Reeve]

When I leased, the lease was actually a better deal financially, even if I'd purchased the vehicle at the end of the lease.

But the real issue with leasing is that there are mileage maximums, past which you have to pay a penalty per mile. What that means is that any time you're thinking of driving your car any significant distance, you have to second guess yourself about the mileage, which sucks. I'll never lease again, just because I don't want miles hanging over my head.

[melodramocracy]

Leasing is cheaper up front (which can ultimately land you in a nicer car than you may be able to afford outright), and it's something where you can move to another vehicle at the end of the contract fairly easily.

It really depends on, most importantly, the sort of driving you do, and your own personal wants. If you're a long term kind of vehicle owner, or want something very specific, leasing probably isn't for you. If you drive less than 10-12k / year, and want to keep up with fairly new models as they come out, it might be something you want to pursue.

One thing that IS nice about many lease programs is that there's effectively nothing you need to pay for aside from gas and insurance.

[cubby]

A lease is great if you want a consistent car payment and a typically new(er) car along the way. You can upgrade as you go when each lease ends and the amount you pay for the lease typically doesn't change much, unless you're switching from something like a sedan to a larger SUV (like a Toyota Camry to a Chevy Surburban). The lease payments from each car "upgrade" might be a little different, but not much. You'll end up always having a car payment, but you'll also have a very reliable and new car, never more than four years old. As Reeve pointed out, the miles issue can be a drag, although I've leased three cars in my life and never topped the mileage maximums, it was always hanging there. Leases typically ask you to keep under 10-12k miles per year. It can vary. You'll never own the car. You can buy the car at the end of the lease, and the dealerships typically have a set amount that they call the "residual" - that's what you'd have to finance and make payments on when the lease ends, if you choose to buy it. You never have to buy it, but it's always and option.

Buying a car is great if you don't want a car payment after about five years, and intend to keep the car for a long time. You'll pay more per month for the purchase than the lease, but after you finish paying it off you'll own it. No more car payment.

Remember a car is not an asset, it's a liability - people tend to forget that. Assets increase in value each year - a car does not do that.

There are exceptions to everything I've said here, just so you know. This is general information, not specific.

[Cantwingrr]

All these posts were extremely helpful and well informed. Thanks for all the replies friends of mmo-c

[Deleted]

It depends on what you want for a car. If you wish to have a car for the next 10-15 years and just keep that car then purchasing works out vastly cheaper.

If you want a new car every 2-3 years then leasing is likely to be more cost effective.

[gweniver]

I leased several cars, but decided to buy my last one. As I get older, I decided I didn't want to always have a car payment. Now I have equity in my car and once it is paid off that payment can go toward other things (including a pay for car repairs fund).