As a first-time car buyer, whether to buy or lease my next car is a tough decision. On one hand, leasing is appealing because it provides the flexibility for an affordable car payment since my budget is based on an entry level job salary. There is also opportunity to trade in for something different if I am not completely satisfied with my car choice, which eliminates pressure on a pretty big life decision.
On the contrary, buying is also attractive because I will own my car and can put a personal investment into a long-term purchase. This also allows me to create a budget that can fit seamlessly into my lifestyle to help me pay my car off in an appropriate time frame.
Is there a correct choice? It all seems to be based on personal preference and priorities. I’m going to lay out the basic lifestyle and financial factors of the two to give you the full scope to make your car buying decision easier.
While you check out these tips, I recommend checking out Edmunds Auto Calculator to see how your current budget matches up to buying vs. leasing for your next car decision.
Let’s begin with leasing.
Should I lease?
Leasing a car means consistently having the opportunity to drive the best cars on the market. You don’t own your car, but after a short stint, you can return it and continue to drive the best cars off the lot for a cheaper price.
- Your monthly payments are lower.
- You have the choice to drive better cars for less money.
- Your leased vehicle is covered under factory warranty, which means repair costs are lower.
- There are no trade-in hassles.
- Sales tax is less.
- You don’t own the car at the end of the lease, unless you buy it outright.
- Most leases limit your number of miles per year (although you can negotiate the mileage or purchase extra miles).
- In the long run, leasing a car can become more expensive if you buy a car and keep it for years after it is paid off.
- Terminating your lease early is very costly.
- You could potentially be hit with unexpected wear-and-tear charges.
Leasing is a very good option for those searching for a sense of freedom and affordability. You won’t be tied down to the same car for 20+ years; however, if you come to love your leased car, you still have the chance to buy the car once the lease has ended. It gives you a sense of a freedom to shop the car market, and nail down your dream car through various lease agreements.
Should I Buy?
Buying a car is very permanent and can be a hefty price. There isn’t much room for experimentation because once you decide on a car brand and model to buy, you now own that vehicle. It is an exciting time though because your purchase means you own property and get to call something yours.
- You own your car – you can change it any way you’d like.
- It’s a smart long-term purchase.
- There is no mileage limit.
- You have freedom to sell the car whenever you want.
- Your current car can be used as a trade-in when you’re looking to upgrade.
- The initial down payment is expensive.
- Car payments are higher than lease payments.
- Your car can be covered by warranty, but once the warranty expires, you’re solely responsible for repair costs.
- Trade-in or selling hassles.
- You will be putting more into a car that depreciates in value as newer models are released yearly.
Buying is an equally good option compared to leasing if you’re looking to build credit, own property, and invest in a long-term purchase for your future. Once you sign the papers, the car is yours to do with what you please and to run for as long as the car will allow. That’s a different type of freedom because you don’t have any mileage restrictions and you’re free to customize as your taste pleases.
So, what should I do?
It’s apparent that this situation isn’t an easy decision. Both choices are technically right, but it’s all dependent on personal preference, budget, and investment needs. The best piece of advice is to sit down and map out your current budget. As a recent college graduate, buying a car right now is probably not the best financial option for me. However, I may be able to work with a dealership to lease a car for three years while I begin to build up my bank account because my monthly payments will be lower. Also, I won’t have to worry if something breaks down because I am covered under factory warranty. For someone just starting out in my adult career, leasing may outweigh buying because although I want to eventually invest in a long-term car, my current financial situation may not allow me to get exactly what I want right now.
Here is another great source that outlines this discussion in full detail → Buying a Car vs. Leasing
As always, if you are looking to learn more about the buying vs. leasing discussion, don’t hesitate to call us at Doan Ford to learn more about your options based on your personal budget and needs.