Buying a New Car vs. Leasing: Which Should I Choose?

After having your old vehicle paid off for several years now, it’s time to get a new one. You’ve read a lot online about buying a new car versus leasing but still can’t make up your mind. Deciding which option makes the most sense can be confusing, and there are positives and negatives associated with each. In the end, choosing between buying a car or leasing boils down to what works best based on your lifestyle, transportation needs, and budget. To help make your decision a more rewarding one, here’s some input from the pros.

How Does Leasing Work?

Leasing is a type of auto financing where you’re not actually paying for the entire car. Instead, you’re only paying for the depreciation that occurs over the lease’s term, which is usually 2 to 4 years, plus fees and interest. Leasing usually requires an upfront down payment when signing a contract, and then you’ll pay the balance of the vehicle’s price in monthly increments until the term is over. The salesperson might throw out phrases like “capitalized cost”, “residual value” and “money factor”, so familiarize yourself with those before signing on the dotted line.

What if I Buy a Car?

When you buy a car, you are paying the entire negotiated price using your trade-in value, cash, financing, or a combination of all three. A typical transaction involves a down payment, trade-in of your existing vehicle, and taking out an auto loan with set monthly payments for up to 6 or even 7 years. When financing a car, the lender holds onto the title until you pay off the entire financed amount. At that point, you take over ownership of the vehicle’s title clear and free.

Pros and Cons of Leasing

Those desiring a newer vehicle for business, entertaining clients or simply because they like to drive one tend to lease because it’s easier to upgrade every 2 to 3 years. Overall, the pros of leasing a new car include:  

• No or little down payment required
• Lower monthly payments
• You can drive a more expensive car for less money.
• No trade-in or selling negotiations after the lease are over   
• Fewer sales tax paid

The cons of leasing are:

• You don’t own the vehicle when the lease ends, although you’ll have the option to buy.
• Mileage per year is capped, usually at 12,000 miles, although you can pay for more.
• Lease contracts can be confusing.
• You may have to pay excess wear-and-tear fees that can be hidden in the contract.
• If your financial situation changes, it can be costly to terminate a lease early.
• You cannot customize or modify the car.
• You’ll pay more over the long haul for a leased vehicle than one you purchase and keep for several years.  

Pros and Cons of Buying

Buying a car works best for drivers who plan on keeping their vehicle for several years after it’s been paid off, for example, to pass it down to a college-bound family member. These are the pros of buying a car:

• No excess mileage charges
• Provides trade-in or resale value later
• More flexibility, as you can sell or trade-in the car whenever you want.
• You can modify or customize your car as you please.
• You’ll save money over the long haul once it’s paid off.

Cons associated with buying a new car include:

• Higher monthly payments
• A larger down payment is required.
• Once the warranty has expired you are responsible for all repair costs.
• The hassle of trade-in or selling negotiations
• More cash tied up in a car that will depreciate-in-value over the years

In the end, deciding between buying and leasing comes down to the importance of personal tastes and priorities versus pure dollars and cents.

How Can I Find a Good Local Auto Body Shop?

Whether you choose to lease a new vehicle or buy one, accidents happen. When you’re involved in one, you can promptly locate a good local auto body shop by using the nationwide Carwise referral network. Collision and glass repair shops featured on Carwise’s website have the I-CAR and ASE-certified technicians, equipment and services you need to repair your ride promptly and reliably. Most work directly with insurance companies, so you don’t have to, and warranty their outcomes for many miles of care-free driving.

Search your zip code now for a customer-reviewed auto body or glass repair shop nearby: www.carwise.com.