Buying a New or Used Car: Leasing vs. Buying
When shopping for a new or used car, you may wonder whether it’s better to buy or lease. Buying offers more freedom and allows you to keep the vehicle for as long as desired, but it also comes with the risk of ownership. Leasing, on the other hand, offers less risk and more consistency, but also gives you less flexibility. Since each has their pros and cons, check out our tips below to learn whether leasing or buying may be the best option for you.
Factors to Consider
- How often you want a new car: If you enjoy having a new car with the latest technology, leasing may be the best option as it allows you to get a new vehicle every 2-3 years. If you don’t mind keeping the same car for longer than a few years, owning may be a better investment.
- Budget: Lease payments are typically lower than loan payments making it more affordable up front, but you also won’t walk away with your own vehicle to re-sell.
- How much you drive: If you drive far distances on a regular basis, leasing may not be ideal since there are often mileage restrictions noted in lease contracts.
Leasing: Less Risk, Less Flexibility
Leasing a car is a great way to save money while still getting a new vehicle. A lease period typically lasts 2-3 years, but shorter and longer leases are also available depending on the dealership. While rates are usually lower than loan payments, you also have to pay fees upfront and are often restricted on vehicle usage, such as maximum mileage. Below are additional pros and cons to consider:
Pros:
- Lower monthly payments make leasing a more affordable option upfront
- Starting new leases every few years means you can always drive a new car
- Maintenance is usually covered under lease contracts, so you don’t usually need to worry about extra maintenance costs
- You don’t need to worry about the car’s trade-in value for re-sale
Cons:
- Contracts often specify mileage limitations, so you may incur extra fees if you exceed them
- Maintenance is usually free of charge, but if you don’t keep up with it, you may incur extra fees when you return the car
- Leasing year after year can be costly, since at a certain point you will be paying more to lease than you would have purchasing a vehicle
- Ending a lease early can be difficult and costly
Buying: Worth the Investment?
Owning a car has the advantage of walking away with a long-term investment, but comes with more risk and often higher payments for a loan than a lease. However, it also gives you complete control over how you take care of the car and how much you drive. Here are some pros and cons of buying a car:
Pros:
- Full ownership rights and ability to modify the vehicle however you’d like
- Flexibility and freedom since you aren’t tied to lease stipulations
- Provides a long-term investment
Cons:
- Financing is often more costly than leasing
- Finances and loan opportunities may limit the type of vehicles you can afford
- You are fully responsible for maintenance and upkeep, registration, etc.
- Cars depreciate quickly and you will be responsible for any loss in value when you go to resell
When it comes to leasing or buying a vehicle, take the time to sit down and decide which option fits your current lifestyle and financial situation best. If you’re still unsure, head over to your local car dealership to discuss your options with a professional.
When in the market for a used car, stop by Carousel Preowned. Carousel Preowned serving Iowa City, Cedar Rapids, Davenport, North Liberty, Marion, and Coralville, IA, is proud to be an automotive leader in our community. We do our best to ensure your complete satisfaction every time you step into our car dealership. This is why we offer the widest selection of used and pre-owned cars, trucks, and SUVs and provide true ease of purchase in Iowa.