to lease or buy a car

2020. Is It Better to Lease or Buy a Car?

To Lease or Buy A Car Is The Question.

Outside of perhaps buying a home, making the decision to lease or buy a car is perhaps one of the biggest financial bridges you have to cross in life.

Money, aka, the cost to lease vs buy a car is a huge factor. It is not the only factor on the table however. Current life circumstances, your individual taste, etc., will also play a significant role in your decision making as to whether to buy or lease a new car.

Today, let’s take a look at the upside and downside to buying versus leasing so you feel mega equipped in choosing the right option, whatever that may be, for you and perhaps for your family.

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Is it Smarter to Buy or Lease?

As already touched on briefly, the decision to lease or buy a car depends on a number of factors you should painstakingly consider.

Some of these factors include your budget, your personal taste, and your current needs or the needs of your family at large.

I strongly believe weighing the pros and cons of the buy vs lease decision, as it relates specifically to your unique situation, should drive your ultimate decision.

What’s right for the family across the street, or across town, may not necessarily work for you.

Let’s start by taking a look at some of the reasons why buying may make sense and perhaps win the discussion on if it is better to lease or buy a car.

What Are The Benefits Of Buying A Car

  1. Freedom that comes with owning.  As the owner of your vehicle, you have the infinite freedom that comes with owning vs leasing. You can choose to sell it outright when you are ready, or trade it in on impulse for a newer version. You are not compelled to a fixed period of driving the same vehicle as is the case if you were to sign a lease.
  2. You Pay Less if you buy. While lease payments are generally tailored to be less expensive than a car note, overtime, leases cost more. When you buy vs. lease, you build ownership equity in your car which could be an asset to you when you decide to trade your vehicle in.
  3. Unlimited Miles. If you do not want to be restricted on how many miles you can drive, buying is the option for you. In a lease, there is a contractual restriction on how many miles you can rack up on the vehicle annually. The leasing companies hold you to this by levying a hefty fine on you if you happen to exceed the stipulated number of miles for the lease period.
  4. Initial Price. We’ve all heard that brand new cars loose a good amount of value once driven off the lot. While how much value is lost can be subjective, the following statement is fact. Depending on the type of vehicle, most depreciate 20 to 40 percent within the first 2-5 years. As a buyer, this means you can buy a pre-owned vehicle within the first few years of its being manufactured and pay much less off the initial sticker price.

If you own a home, you can get cash out. See how much.

Why Leasing A Car Is Smart

  1. Reduced Monthly Payments. This one is perhaps the most obvious. Monthly leasing costs are generally much less than a monthly car note. A major drawback, and one you must not ignore is, there could be hefty fees on the back end when you return the leased vehicle. These could be for unrepaired damage to the vehicle, or exceeding the allotted mileage.
  2. You always have a newer vehicle. When you lease, you get to sport a new vehicle every few years.  This has its perks. Newer technology, that perpetual new car smell, safety features, endless looks from the neighbors, the whole nine yards. Aside from the superficial,  you also have fewer repair expenses. Lease periods are typically covered by the manufacturer’s warranty since the leased vehicle is new. You are not hit with high-ticket repairs during the lease since these are covered. Keep in mind though that you are responsible still for the regular maintenance costs.
  3. No “Gap” Needed. As touched on earlier, vehicles depreciate heftily during their first few years. Car buyers often find themselves owing more than their vehicle is worth. To combat this, they have to purchase Gap insurance. In the case of a lease, you do not have to worry about Gap insurance as the lease payments are tied to the expected depreciation of the vehicle over the lease term.
  4. No Loan Approval Necessary. Car leasing companies are typically not as stringent on the lease approval process as is with car loan companies. This is because, a leasing company can simply take back the vehicle if lease payments are missed. If your credit score leaves lots to desire, you may not ordinarily qualify for a car loan. A lease is much more forgiving of your credit. This for you could be the deciding factor on answering the question – is it better to lease or buy a car?

As highlighted above, some will find Leasing vs buying more appealing because leasing is way less maintenance intensive, than buying.

Getting The Best Car Buying Deal


beautiful mustang on my pennies to dollars

  1. Understand your need. Yes, the car buying experience for my single, 20 something year old reader versus the parents would not draw many stark comparisons. Both sides however should know exactly what they need before hand. Note, the use of the word need. A car is a depreciable asset and should first, meet a need, before satisfying a want.
  2. Have a Budget. It is important you have a budget and stick to it. Once you understand if the need is for a two door sports vehicle, or a minivan to cart the kidos around, set a firm  budget and plan on sticking to it.
  3. Compare available options. Compare all your options (within the budget). Have your pros and cons data that you can readily refer to, in order to inform your decision.
  4. Go See the Vehicles. Once the shortlist is made, make time to go to the dealership and inspect the vehicles in person. Physical inspections reveal imperfections the online pictures may not. Do not be shy to insist on a pre-buy inspection done by a mechanic you know and trust.
  5. Arm Yourself with Competitor Prices. Once your decision is all but made, be sure you are armed with competitor prices when you visit the dealership. Haggle. It is not old-fashioned to do so, regardless of the “no haggle sign”on the front of the dealership. Most of the best deals go to people who simply haggle and stand their ground.
  6. Do not be afraid to walk away. Be consistent with your demands, and don’t be afraid to walk away from a “deal”. If you’ve done your research, you know there are other options. You have an “on to the next one” mindset. Most times, the dealers would magically do all they can to meet you in the middle.

Getting The Best Leasing Deal

  1. Again, understand your need. Just like in buying, fully understand if your need is for a family SUV or for a leisure drop top.
  2. Compare vehicles and leasing deals. Not all leases are made equal. Compare cars and the lease incentives they each come with. How many miles can you rack up each year? What are the fees? Safety features? Options?
  3. Physical Inspection: In the case of leases, the cars are new so you do not need a pre-buy inspection done. You should however test drive the vehicles and ask a ton of questions.
  4. Be firm: Advertised sticker prices do not have to be the end all and be all. Haggle and get that purchase price down as that would translate to a lower lease payment too.
  5. Stay consistent: Now that the lease vehicle is in your possession, do not forget the dealers make a ton off penalties and fees. Never miss a lease payment, drive safe, take care of regular maintenance, stay under the allotted mileage and be familiar with all the lease terms.

Is it easier to lease or buy a car?

Leasing comes with a sense of freedom and the excitement of driving a new car every few years. Do not forget that buying however and being able to pay the vehicle off and drive an un-metered number of miles is also a very liberating feeling

Leasing Vs Buying A Car (Pros And Cons)

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  1. Leasing is easier on the monthy budget as lease payments are typically smaller than auto loan payments.
  2. The benefit of driving a new car every few years is an allure to some.

Thumbs Down image. My pennies to dollars

  1. When you lease, you’re just renting and ultimately simply throwing away those monthly rent payments with no value or equity being built.
  2. There are sometime added or unexpected fees on the backend of leases that could leave a bitter taste in the mouth of the lessee.

In Conclusion

Is it better to lease or buy a car?

If your mind is set on playing the long game and saving over the long-term, you should most likely buy vs lease your next vehicle. 

Being meticulous about the regular maintenance of your vehicle is a great way to keep it on the road for a long time, or until, the cost of maintenance exceeds the replacement cost.

Leasing is just a fancy word for renting. It definitely keeps you on the road, with no worry about high-ticket maintenance costs, and , you get to step out with a nice looking, up to date vehicle daily.

Renting a vehicle, however, rather than owning, ultimately takes a back seat to truly being able to own and perhaps even build some trade-in equity.

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