Buy or Lease a Car?
The age-old decision between leasing and buying isn’t actually the difference in finances. Instead, Reed says, it’s a lifestyle choice. Those who like driving a new car every few years, find a lease more appealing, and since the individual payments are less expensive than buying a car, lessees are usually able to drive nicer cars than they could actually afford. Leases have several aspects that make them good choices, like the up-front out-of-pocket expenses are generally lower, the down payment is usually low, and sometimes nonexistent. Monthly payments, too, are much lower than loan payments, and leases are often easier to obtain than a loan.
On the other hand, insurance rates are usually higher for leased vehicles since lease coverage may include gap insurance. Each time you turn in your old car for a new one, there are added fees. If the dealer determines that your car has more than normal wear and tear on it, you’ll be charged extra fees for repairs. Mileage, too, adds to the cost of a lease when you turn in the car. Mileage fees of anywhere from 5 to 20 cents per mile can really add up. Car finance may be a better choice.