Getting a new vehicle is exciting and sometimes nerve wracking. There are a ton of important decisions that need to be made before you commit to a car purchase. One of those decisions is whether you should buy/finance the car or lease the car. Leasing may have you making smaller monthly payments, but it may not be worth some of the other downsides of car leasing. On the other hand, financing a car may mean making higher monthly payments but in the end will it be worth it to have complete ownership of the vehicle? In this article, we’ll lay out pro and con arguments for both leasing a car and buying a car.
Leasing vs Buying a Car
Both purchasing and leasing a new car are good options, depending on your needs one may be more fitting for you. Buying a car means less limits on how much you may drive and what you can do with the vehicle. In addition, after the loan is paid off, you own the car. But if you want to get into a premium car, leasing is a less expensive choice on a month-to-month basis. It all boils down to how many kilometres you anticipate driving annually, how much money you are ready to spend, and how you plan to use the car.
Who is Leasing Best Suited For?
If you want to get behind the wheel of a car without making a large upfront investment, leasing is the best choice for you. The monthly costs are reduced through leasing to a more affordable amount. Additionally, it enables you to drive a more luxurious car than you might otherwise be able to afford if you were buying. But keep in mind that leasing has mileage restrictions and may have additional wear-and-tear fees. Leasing might not be the best option for you put a ton of kilometres on your vehicle..
Who is Buying Best Suited For?
Buying might be preferable for you if you like to have complete control over your finances and vehicle. No mileage limitations or potential extra fees for things like wear and tear will be an issue if you decide to buy. You will have complete control over the car and can sell or trade it in at any moment if you decide to buy it outright or finance it with a loan, which is a perk that leasing cannot provide.
The Benefits of Leasing a Car
Lower monthly payments. If you’re main concern is spending less monthly, leasing is the way to go since you’re not paying for the depreciation of the vehicle.
Less money down. Leasing a vehicle means making a smaller down payment and in some cases, no down payment at all.
Manufacturer warranty options. With most car leases, you will likely be covered by a warranty for the first 3 years of the agreement.
The Cons of Leasing a Car
Mileage limits. The majority of leases have yearly mileage limitations, which typically range from 15,000 to 25,000 kilometres. You will be charged a premium if you exceed your agreed upon mileage limit.
Potential additional costs. You may be subject to wear and tear fees if the dealership deems you exceeded the appropriate amount of wear and tear.
You won’t own the vehicle. Unless you choose to buyout your lease, you won’t own the vehicle at the end of the term agreement. Meaning if you continue to lease every vehicle you have, you will never own the vehicle and will always be paying monthly to drive the vehicles.
The Benefits of Buying a Car
No mileage limits. Buying a car means you own it and you can do what you want with it. There’s no worrying about exceeding annual mileage limits with a bought car.
No wear and tear charges. Like the point above, if you damage your vehicle that’s your own responsibility and if you don’t feel like repairing that rip in your seat, that’s ok.
You can sell or trade-in the vehicle. Because the car is yours, once you’ve fully paid off the vehicle you can decide whether you want to ride it into the ground, sell it privately or trade it into the dealership for your next vehicle.
The Cons of Buying a Car
Higher monthly payments. When you decide to finance a car, you will likely have to pay more in monthly payments.
A bigger down payment is usually required. The more money you put down, the less you owe, lowering your monthly payments but it will still take a bigger chunk out of your savings.
Maintenance costs. Lastly, maintaining a car requires spending money when something breaks. Some things might be covered by the warranty, but once it expires, you're on your own.
In Conclusion…
Examining your budget and driving style carefully will help you decide whether to buy or lease a car. To determine the most economical route, evaluate how much you can easily afford to pay upfront each month and how many kilometres you expect to go.
