You might have spent days, weeks or months agonizing over which car to take home. After you've made your decision, there's another debate to settle -- buying or leasing your new vehicle. Buying has long-term advantages, but if you're looking for something short term then leasing might be a better option. Plus, each idea has other intangible benefits.
Leasing for the Short Term
If you're looking for a short-term commitment then leasing is best for you. Your reasoning could be that you're living temporarily in a different city. Or maybe you were recently married and while you and your spouse like that sports car, a more family-friendly vehicle is going to be necessary when you start having kids. Lease terms typically run 36 to 60 months, or three to five years.
Lease to Get the Car You Want
Say, for example, you are in love with a certain high-end luxury vehicle. But it costs $40,000. Or maybe the car you need costs $15,000. Either way, you don't have the financial resources to buy that car. Leasing allows you to get the car you want and pay much less for it. Instead of paying full value for the car, you only pay a fraction while enjoying its full benefits.
Buy to Save Long Term
If you need a car for the long term then it is a better idea to buy your car. Leasing costs more in the long run. While monthly payments when buying are usually more, your total investment is less. For example, you paid $20,580 for a car and it took you six years to pay it off. You lease the same car for three years at $289 per month, plus $2,000 for a down payment. Your total cost after 36 months is $12,404. Then you spend the same on your next car. Over six years, you've spent $24,808, more than what you could have for buying the car and owned it longer.
Buying Means Ownership
For some, there is a sense of pride in owning your own car. It's yours -- it doesn't belong to anyone else. But what may be perhaps more important is that owning a car provides you with equity. It adds to your net worth. If you were to walk into your bank for a needed loan, you can use your car as collateral, for example.
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