Why You Should Buy Your Car Vs Why You Should Lease It
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 New Car
- Guide For First-Time New-Car Buyers
- Quick Guide To Buying A New Car
- 10 Steps To Buying A New Car
- The Complete Guide To Buying A New Car
How To Buy A Used Car
- 10 Steps To Buying A Used Car
- Buying A Used Car
- 10 Steps To Buying A Used Car
- Guide To Buying A Used Car
- Used Car Buying Guide
- Carefully Inspecting A Used Car
- 10 Things To Look For When Buying A Used Car
- Used Car Work Sheet
How To Lease A Car
- Quick Guide To Leasing A New Car
- How To Lease A Car And Get The Best Deal
- 5 Dumb Car Leasing Mistakes To Avoid
- Leasing 101
- Leasing Guide: How To Lease Smart
- The “Residual Value” Of Leasing
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.
*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:
