·

Why You Should Buy Your Car Vs Why You Should Lease It

car

When I graduated college in 2012, I was driving a crappy old silver Honda that I put through hell and back through four years of school. It was packed up and unpacked four different times as I moved around campus and into an apartment. I accidentally backed it up into a truck (which ended up piercing the back of my car from the boat hook that was on the other vehicle). The hood of my car was rusted at the edges, and the body of the car had more dings and scrapes on it than I care to admit. However, I wasn’t sure what I was going to do for work or if I would even get a job out of school, so swapping out my ride with an alternative was a decision that was still up in the air.

One of our readers recently wrote in asking us to weigh the pros and cons of leasing a car vs. buying a car. While I’m not a car expert, I have leased a car (Honda) for the last three years, so I can share my experiences on the matter. When I ended up getting a full-time job the summer after I graduated college, I knew that swapping out my old car for something else was now an option available to me. Personally, I always preferred the idea of leasing a car, because having the flexibility to walk away after the term of the lease was up was vastly appealing to me. To be completely honest, I hate driving, and moving into the city and away from the responsibilities of driving a car is my greatest ambition. However, when I decided to lease a car back in 2012, I needed to drive 40 minutes to work each day, and my town was (and is) so small there isn’t even a bus stop. Having a car was something I needed in order to get myself to and from work each day.

Leasing worked for me, because I didn’t have a lot of money to use for a down payment on the vehicle, the monthly payments were interest free, and I liked the fact that I got to test-drive the vehicle for three years (back then, I thought I might want to purchase and finance it afterwards). Leasing a vehicle also meant that I wouldn’t have to worry about any maintenance issues, because it’s the responsibly of the dealership to take care of repairs, which was one less thing to worry about.

While I do advocate taking public transportation as much as possible and limiting the amount you drive so the environment isn’t polluted further, I realize that driving is essential for some people. I’ve gathered some great resources below for reading on this subject that will help anyone who is seesawing back and forth deciding what type of car best suites their needs. There are three main options when it comes to deciding how you’ll get around if a car is something you’re interested in or need, so I’ve broken them out below.

How To Buy A New Car

How To Buy A Used Car

How To Lease A Car

Now of course, within these three categories there are even more options to consider. For example, you can buy a used car from a dealership with a warranty, from a dealership, as is,  with no warranty, or from a private owner with no warranty. But we won’t delve into those in much detail — that could be an article in and of itself.

For easy reading, I’ve created a chart* below that will help you do a quick comparison between buying and leasing a car, which is organized by the top categories one should consider. It’s an easy way to see the areas in which the two differ.

Buying VS Leasing-01

*The information for this chart was compiled from a number of sources, mainly here, here, and here.

If you are really struggling with what to do, my advice would be to choose three cars in a similar price range, compare the purchase interest rate to leasing interest rate to see what makes sense for you. If you are strapped for cash, leasing will probably be your better option since you can lease (some) cars without a down payment. But everyone’s situation will be different, and there are a number of variables that can factor into this decision — do your research and ask the experts around you!

Additional resources to help you decide:

  • I would add to this that, if you’re in the market for a new model or an electric or hybrid one, it makes more sense to lease. The technology is changing fast and the newer the model, the more kinks there are to work out (remember the prius and that terrifying brake defect?). But if you’re getting a car that has been on the market for years (think Ford 250 truck or a Toyota Camry) those models have been around for years and it’s easier for a mechanic to diagnose any problems, find replacement parts and make any needed maintenance/repairs.

  • Summer

    Many manufacturer websites have calculators that will show you the difference between leasing and buying a particular car. If you go to, say, Fiat’s website and configure a particular model, at the end you can see your hypothetical options. In general, if you’re going to buy, you’re better off buying used. A lightly used, certified pre-owned car still backed by the manufacturer warranty is going to save you a few thousand bucks and still offer the peace of mind of something straight off the showroom floor.

    As someone who absolutely loves driving, used to be heavy into the recreational ~automotive scene~, and sold cars (Toyota) for spell, I figured I would always be that person who is driving something different every couple of years. Alas, I’ve had my 2003 Acura since 2008 and even with 178k miles, oxidized paint and a few body dings, I still love it dearly. Even more, I love that it has been paid off since 2012. Currently I live in a city where not having a car isn’t an option, but even if I were to relocate and not be in dire need of one, I’d need to at least find a friend with something I could take for a spin once in a while because I would be genuinely sad if I never had a clutch to push in and a gearbox to shift.

  • Chrs

    Leasing is an option I never even considered for a vehicle, although now that I think about it, the argument for leasing is similar to my reasons for living in an apartment. I worked a sucky job for two years to do it, but now I have bought a car with cash, and I can’t think why this method is not more common. Going into student teaching this fall, I need my monthly expenses to be as low as possible.

  • Irisgeist

    Can anybody please comment on what happens in case of damage/car destruction because of an accident? Of course you would have an insurance in case of that, but are there any advantages/disadvantages between leasing and buying in that scenario?

  • Dylan

    Buying a fuel efficient used car known for reliability is by far the best option for your bank account. There is a huge premium paid for the luxury a new vehicle

  • I think it’s funny that I’m seeing this article now because I just bought a car today. I originally thought I was going to lease a car, but then I ended up financing one. I think the decision was the right one for me. We shall see.

  • JohnPeterson1987

    If you bought a car on credit and decided to change it with a new one, you will face the uncomfortable procedure of the car sale. The car leasing allows you to change a car every half-year. Pay attention to the new project https://carvoy.com/, which offers car leasing service without realtors.