Should you lease or finance your next car?

If it's time for a new ride, you might be wondering whether to buy or lease? 

There's no easy answer, since both have their advantages and disadvantages. It boils down to your lifestyle and needs/wants.

Financially, buying a car is better in the long run because once it's paid for, it's yours. You can do anything with it or to it and drive it as much as you want. When you lease a car, once your lease is up, you have nothing.

However, there are advantages to leasing. Your monthly payments are lower when you lease, you don't need a huge down payment and repairs cost less because your car is under warranty. Plus, you get to drive a newer car.

Automotive resource Edmunds lists pros and cons of both financing and leasing:

Leasing Pros:

  • Lower monthly payments; low or no down payment.
  • Drive a better car for less money.
  • Lower repair costs under factory warranty.
  • A new car every two or three years with less sales tax and no trade-in hassle.

Leasing Cons:

  • You don't own the car.
  • Mileage is limited to 12,000 miles a year or extra charge.
  • You pay more in the long run.
  • Wear-and-tear charges are significant.
  • Terminating the lease is expensive.

Buying Pros:

  • Modify your car as you please.
  • Save money long-term.
  • Drive as much as you like.
  • Sell the car whenever you want.
  • Trade-in value on your next car.

Buying Cons:

  • Hefty down payment.
  • Higher monthly car payments.
  • When warranty expires you pay for repairs.
  • Must trade in or sell it when you get your next car.
  • The longer you keep in the more it depreciates.

So, ultimately, the choice to buy or lease boils down to a combination of factors based on your personal needs, wants and driving habits.

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