How to Decide Whether to Lease or Buy a Car
Leasing can give you more buying power but demands meticulous vehicle care and maintenance.
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Instructions
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1
Decide whether you have enough money for a down payment on a car. If you don't, consider leasing.
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2
Decide whether you intend to own a car for a long time. If you do, consider buying.
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3
Decide whether you are going to use the vehicle in a manner likely to damage it - as a work truck, for example. If you are likely to damage the vehicle, consider buying.
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4
Find out how good your credit rating is. If it's bad or is mixed, consider buying; leasing requires better credit.
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Estimate how much you can spend per month on payments. If you can't make high monthly payments, consider leasing.
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Tips & Warnings
Leasing and buying each have advantages and disadvantages. Consult your loan officer or accountant for advice.
If you total a leased car, you may be financially liable for the balance of payments on its total value.
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Comments
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Jan 18, 2006
Don't ever borrow money for more than 5 years on a used car. Don't go more than 3 years. If you cannot afford the payment, leasing may be a good idea for you. Keep in mind you can buy out a lease at any time after the first year in general. If you have a change in your financial situation, you may want to convert your lease to a buy after a few years. Consult with a financial planner first. -
Nov 22, 2005
If you lease a car, ensure your lease is "closed-end". If "opened-end", your rate, therefore mo. payment, can change any time during the lease. Even though "opened-end" leases are supposed to be illegal, I know (personally) they still exist! Beware!
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Nov 22, 2005
By making a loan over a 7-8 year repayment term your monthly payment will be about the same as a lease payment. Try to get the lowest interest rate possible -- for example, borrow through a bank line of credit at prime or near prime rates.
