The Advantages and Disadvantages of Buying Vs. Leasing a Vehicle

If you know what you want out of a vehicle, making the decision to buy or lease can be simple. If you're unsure, you can look at your pattern of use for your previous vehicle to see whether leasing or buying is the right decision for you.

Advantages of Buying

If you're the type of person who likes to drive a car until it can't be driven any more, buying will likely be the best decision for you. When you purchase a vehicle, after you finish paying off the note to the bank, it is yours. You can drive it for several years, customize it and sell it when you no longer want it. Buying a car means that you can put as many miles on it as you wish -- neither the bank nor the car dealership will care if the car has 100,000 miles on it after only a year.

Disadvantages of Buying

When you purchase a car, the value of the car goes down the minute you drive it off the lot. If you were to sell the car, you'd take a loss. As the car gets older and has more miles put on it, its value depreciates even more. By the third or fourth year of ownership, the car may begin having some mechanical difficulties and showing wear. At this point, you may decide you want a new car. Meanwhile, however, you may have two or three more years of payments left on the car.

Advantages of Leasing

When you choose to lease cars instead of buying them, it can feel as though you always have a relatively new car. You won't have to deal with many mechanical problems, which can bring peace of mind. Perhaps the biggest advantage to leasing a car is that you'll be able to make lower monthly payments, as you'll be paying on the depreciation of the car rather than its full value. Often, the down payment is lower as well.

Disadvantages of Leasing

If you tend to put a lot of miles on your car when commuting or traveling, you'll find that leasing can become an expensive proposition. Most leases limit you to 15,000 miles each year; exceed this mileage and you'll be charged for the extra miles once the lease is up. When the lease is up, the car must be in good condition, or you'll be charged for additional depreciation. Your daughter's clay sculpture for school that melted in the backseat will cost you. Once you turn your vehicle in, you must be prepared to lease or buy another vehicle, as you won't have any ownership in the car.