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Buy or Lease Your Next Car?

Featured Image
A young couple being handed a set of keys.

Are you the type to want a new car every few years or do you drive a car until the wheels fall off?

Making the decision to lease or buy your next car depends on the type of driver you are and what kind of vehicle you want. We’ve provided some pros and cons of leasing and borrowing to help you make your decision.

Buy or lease a car?

 

 

Advantages

Disadvantages

Buying a new car

 

  • You can order the exact make, model and options that are most important to you
  • There are consumer protection laws on your side
  • The car has value and becomes an asset as the loan is repaid
  • New cars are typically most reliable
  • Most warranties cover repairs and parts
  • New cars can be very expensive - with a high purchase price, requirements for full insurance coverage and costly registration fees
  • The value of the car depreciates almost immediately

Buying a used car

 

  • You may be able to use savings to purchase the car outright
  • Used cars are less expensive than new cars
  • As your loan is repaid, the car becomes an asset
  • A used car's history is usually unknown
  • The car may have been insufficiently maintained, and therefore less reliable
  • Used cars rarely have warranties
  • Older cars tend to wear out and the maintenance costs will increase over time

Leasing

  • The monthly payments are comparatively low
  • Lower down payment
  • Leases are relatively short-term, so you can drive a new car every few years
  • Typically, leased cars have comprehensive warranties
  • The required up-front cost of a leased car is low
  • You can often get a luxury model for low monthly payments
  • Lower repair costs
  • No trade-in hassle or value depreciation concerns
  • The car does not belong to you
  • It is very difficult and expensive to get out of a lease contract
  • The cost of insuring a leased vehicle can be very high
  • You must have good credit
  • They come with mileage limitations (often 10,000 to 15,000 per year)
  • You must pay for any additional mileage or damage beyond basic wear and tear

Typically, financial experts agree buying and keeping a car for the long term is usually a better deal. However, if you are frequently trading-in and purchasing cars every few years, leasing may be a better option. In the end, your decision will come down to your budget and your driving needs. Check out our current car loan rates before you decide.