How to Decide Whether to Lease or Buy a Car

If you are unfamiliar with leasing, want a new car, and don’t know whether you should lease or buy read further. You're about to learn the differences between buying and leasing so that you can determine which option works best for you.

Difficulty: Easy

Instructions

Things You'll Need:

• 10 to 15 minutes
• Pen or pencil
• Paper
• Computer with internet

1. Pick the car you would like to get. Look online to view the car dealer's leasing options. Compare these leasing options with the payment or finance plans they have available. All of this can be found in the finance section of a dealer’s website under titles such as "Payment Plans" or "Payment Calculator."

2. Consider the following differences between leasing and buying presented to in the following steps. Count the amount of times you side with each option.

3. Buy: You like to keep a car for a while and value it, maybe keep it in the family.
   
   Lease: You change cars every 3 to 4 years.

4. Buy: You enjoy adding your own personal touch to your cars, and modifying them.
   
   Lease: You like the clean original look of a car with minimal add-ons.

5. Buy: GAP Insurance allows you to get a new car if this one is lost or stolen.
   
   Lease: GAP Insurance (when applicable- some dealers/financers do not carry) pays back the dealer, not you. You are left with no car.

6. Buy: You have to save a little longer and pay more money down.
   
   Lease: You may be able to get a nicer car for less money over time and less money down.

7. Buy: You own this car. It’s yours so do whatever you want. You'll need auto insurance, but how much you cover is up to you.
   
   Lease: Leasing is like renting an apartment. It costs less than buying, but the standards aren’t as high. There is a limit to what you can do to it since you don’t have ownership, and there is a fee for damages and turn in at the end. You will need traditional auto insurance.

8. Buy: Drive as often or less as you like for however long you like. Sell or trade your car when you want.
   
   Lease: There are contracts of 24 and 36 months with starting mileage of 10,000 per year. You can pay additional to use 12,000 or 15,000 miles per year (which would be more cost effective than going over your miles and being charged for every mile you exceed).

9. Buy: You can sell your car.
   
   Lease: You can buy your car at any point in the lease or for the balloon payment at the end. You can also trade your car in when buying another car because then the new dealer will pay off the car to the other dealership, but that's only if you get the same amount for your car and you buy rather than lease.

10. Buy: Pay tax on a larger sum and worry about car depreciation.
    
    Lease: Pay tax on a smaller sum and don't have to worry about car's depreciation in value.

11. After looking over the comparisons and their results, you have your decision practically made for you.