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Lease vs Buy: Which Is Right for You?

Many shoppers face the decision of leasing versus buying. While it can be a difficult choice, we hope to help make it a little easier. We've highlighted several important factors to consider that should make your lease vs buy decision much easier.


Leasing


Leasing a car has many advantages. For example, most drivers who lease a car make either no down payment or a very low one -- at least compared to drivers who finance a vehicle. That means the up-front cost of leasing is far lower than if you finance or pay with cash.

Monthly payments are also lower. Drivers who lease generally make lower payments because they're basically paying the car's depreciation. That's different from financing, in which you're paying for the vehicle itself, plus interest.


Leasing also lets drivers switch cars frequently. Since the typical lease is two to three years, drivers get a new car whenever the lease expires.


But there can be a few problems with leasing. For one, when a lease is up, you have to return your car to the dealership. Many drivers will view that as a good thing, since they don't have to try to sell it or trade it in. But it also means you're back to square one and have to start over with a new lease or possibly a new purchase.


Also, most leases require you to stick to a certain mileage. Sometimes, low lease deals are conditional on staying below 12,000 or even 10,000 miles per year. Many drivers will find that hard. If you exceed the mileage in the lease contract, you can be on the hook for major fees.


Leases require you to take good care of your car, as well. If you're the type to scrape parking garage pillars or scratch wheels on a curb, leasing probably isn't the right choice. At the end of the lease, you'll be required to fix everything. The same is true for drivers who want to alter their cars: Leases rarely allow for any form of modification, from a new stereo to upgraded wheels.


Buying


For many drivers, buying is the way to go. Shoppers who pay cash own the vehicle outright, while buyers who finance make payments toward the same goal. Either way, eventually you own the car, which is not the case if you lease.


Another benefit to financing is you're using someone else's money to buy your car. That means you can keep most of your cash for other activities. Yes, it's true that those who lease can do the same thing -- but if you finance, you eventually get to keep the car once the payments are over.


Buying or financing a car also allows you to drive as much as you want. There aren't any mileage restrictions, since you own the car -- or, if you finance, you will own the car once you've paid it off. The same is true about modifications, meaning you can add custom stereos or aftermarket spoilers to your heart's content.


There are, however, a few negatives in buying. One is you have to make a down payment. While most lease shoppers make little or no down payment, those who finance often have to pay around 10 to 15 percent of the car's cost up-front. That can take a big bite out of your savings.


Another demerit for buying is that those who finance often make higher payments than those who lease. This is increasingly not the case, as many lenders are trying to lower payments by offering longer finance terms. But in that scenario, it just takes longer to pay off your car.


Conclusion


The lease vs buy question is a difficult one. The answer depends largely on your situation. We hope our information helps you make a wise decision as you set out in search of a new vehicle.

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