Should You Lease or Buy a New Car?

Rent or BuyIf you are in the market for a new vehicle, you may be deciding on whether to buy or lease. There are advantages and disadvantages to each and there are plenty of differences between leasing and buying a car. In general, it makes sense to purchase a car, truck, or SUV if you drive a lot, have kids, and plan on keeping the vehicle for a longer period. If you drive roughly 10,000 miles or less per year and will keep a car in pretty good shape, you might want to consider a lease. Either way, here’s a look at buying a vehicle as opposed to leasing one.

Ownership

 When you purchase a vehicle, it is yours, and you can keep it as long as you want. If you finance your purchase, once the loan is paid you own the car free and clear. When leasing, you do not own the vehicle. You are loaning it for a period of time (determined by the lease). You may decide to buy it at the end of the lease.

Costs & Payments

 If you have the money, you can pay cash for a vehicle and typically get a great deal. You may also opt to use a large down payment and finance the rest. You will also pay taxes, registration, and title fees. If you choose to lease, you will pay those same taxes, registration, and title fees as well as a security deposit and the first month’s payment. A loan payment for a buyer will always be a little higher than that for a lease. The buyer is paying the entire purchase price of the vehicle. A lessee is only paying the vehicle’s depreciation during the term of the contract, plus interest.

Future Value

 On the plus side for a lessee is the fact that future value has no financial effect. A person on a lease does not generate any equity in the vehicle where a buyer does. A car owner who has paid in full or paid off a car loan can tap into that equity if ever needed. In other words, you can use the vehicle for a car title loan. These are short-term loans for a few hundred dollars or maybe a few thousand dollars that are taken out against the value of a car or truck. Embassy Loans has helped tens of thousands of customers use their vehicles to gain access to emergency cash. Someone who leases a vehicle does not have the opportunity to take out a car title loan.