There are many decisions to consider when getting a new car, including whether or not you should get a new or used car or whether you should buy or lease. Here, we’ll help you break down that decision of whether you should buy or lease your next car and hopefully make the buying or leasing decision a little easier.
How Long Do You Plan to Keep Your Next Car?
The first, and likely most important, question to ask yourself when deciding whether to buy or lease your next car is: how long do you plan to keep it? Many people choose leases because they enjoy getting a new car every three years or so. Getting a new car means you can upgrade to the new model, you don’t have to worry about maintenance as the car ages, and if you don’t like the vehicle, you can try something new.
Conversely, many people choose to buy their car because they plan to keep it for longer than the lease or loan. When you pay a car off that you bought, you now have no car payment and you own the vehicle. This is definitely the most financially-responsible decision for those that don’t want a perpetual car payment.
Maintenance
Another thing to consider as your car gets older is maintenance. Every car owner knows the long-time benefits of routine maintenance, but many often choose to neglect the “check engine” light on their dashboard. Some car buyers want to avoid the internal struggle of deciding whether or not it’s worth taking the care to the shop, so they choose to lease instead. Some leasing contracts even include planned services, such as oil changes, tire rotations, and check-ups, which makes it even easier to know that nothing will go wrong with your car. Leasing removes that stress, but at a cost. Lease payments are often higher than financing a car because of these conveniences.
NerdWallet has a great quiz that can help determine whether you should buy or lease your next car, such as determining how much you drive, whether you use your car for business, and more.
Customization
Another thing to remember when choosing whether to buy or lease your car is if you want to customize your car. When you lease a vehicle, you need to return it in the exact same condition with no alterations. Some things, like window tinting, are temporary, but if you want to make any permanent changes to your car, such as changing out the headlights, getting a new paint job, adding a wrap, or any other changes, a lease might not be the best option for you.
Low on Cash, Strong on Credit
One benefit of leasing is that often, you can have as little as a $0 down payment, if you have strong credit. This is great for individuals who don’t have enough saved up for a larger down payment if they were to purchase the car.
But if you are deciding to buy your next car instead of leasing, you will want to save as much as you can for a larger down payment. The more you put down on the car initially, the less your monthly payment will be. If you have a lower credit score, increasing your down payment will also help you secure more favorable terms, such as a lower interest rate.
Driving Distance
Most lease agreements are based on mileage and the most affordable ones start at 10,000 miles. So, if you drive significantly more than 10,000 or 12,000, you may want to consider buying your next vehicle. When you go over your mile limit on a lease, you will likely have to pay a few cents per mile that was over (which can add up!). Occasionally, you’ll run into high-mileage leases that you pay a little extra a month in order to travel greater distances. Just make sure that you are planning on driving those extra miles or you’ll be paying monthly for nothing.
Final Considerations
We’ve covered a lot of aspects that go into buying or leasing your next vehicle, so let’s summarize the questions you should consider:
- How much do you drive a year?
- Do you use your vehicle for personal or business needs?
- Do you take good care of your car? Lease agreements will charge you for every sign of damage
- Do you like driving the newest model of car?
- How long do you plan to have your car?
- Do you want to customize your vehicle?
- Are you okay with always having a car payment?
These questions will help you determine whether you should buy or lease your next car. If you enjoyed taking the quiz I mentioned earlier, here is another quiz you could have a go at name the make and model of the car.
