Many factors go into purchasing a new vehicle. Four or 10 cup holders? Backup camera or navigation? Sport exhaust or heated seats? We all know many of these options are a decision in compromise.
What many don’t think about is the avenue taken in purchasing a new vehicle. What many of us end up at is whether to lease or to buy a vehicle.
There are many things to consider when walking into a dealership.
Leasing not only allows you to purchase a vehicle every few years, it also usually comes with lower monthly payments and sometimes even lower down payments. For people who enjoy the freshest set of wheels, leasing is a great option.
There are downsides to leasing though. Insurance costs may be higher due to the need for gap coverage in case the vehicle is totaled in an accident. Also, if the cars of your choice require a down payment every time you get a new one, this could become quite costly quickly.
Then there is the restriction on mileage. If you are not a heavy commuter and travel modestly, then going over your allocated miles is far from your mind. For those who travel more liberally, going over the allowed 12,000 to 15,000 or so yearly mileage could become a costly issue.
Just look at the realities many are facing on sites like swapalease.com or leasetrader.com, where many are dumping their lease to avoid paying the mileage overages.
With buying, comes great responsibility for the long term.
Where leasing allows the dealership to take on the burden of the depreciation of the vehicle, buying transfers that to the owner.
Monthly payments are higher, though insurance rates are lowering. Maintenance costs will be higher when buying as opposed to leasing, as many leasing programs are shorter than the warranty that comes with the vehicle.
Buying a vehicle allows the owner to be payment free within seven or so years, while someone with a lease will continuously have payments. A key difference between buying and leasing is equity. Equity is not gained when leasing a vehicle and may be something first-time car buyers are looking to establish.
Though someone who buys a new vehicle may not have the opportunity for a new car every few years, eventually they will see a decrease in insurance costs as the vehicle ages—a trade off of sorts.
Buying is a better choice for those who have longer commutes and may not conform to the 15,000-mile yearly-mileage mark.
While cost of ownership may be slightly more with buying a vehicle, it all comes down to lifestyle and finances at the time when looking for a vehicle.