Blog Post

Buying vs. Leasing – Which is Best for Me?

Date Published: Mar 11, 2021



Getting a new vehicle is a pretty big deal and it can be overwhelming, but also exciting, for you are about to have a new ride. However, during your journey on snagging a new set of keys, you may come across two options for securing a vehicle. Those two options are buying or leasing.

Most experts agree that buying and leasing is a personal preference. Of course if your goal is to obtain a vehicle that you want to have with for a long period of time, then by all means buying is the move for you to make. Maybe you are more attracted to the idea of getting a new model every three to four years, and if this is the case, leasing could be the better route for you to take.

There are other aspects of each though, that may influence your decision. So, let’s drive into the more in-depth details of both to help you narrow down what is the best for you. Buckle up because here we go:


Buying a car is the most direct way of obtaining one, whether you pay cash or take out a loan to cover the cost of the car. Before you decide to head down this road, you are going to want to consider both the benefits and the drawbacks, to see if buying is best for your situation.

The Benefits:

  • One day it will be yours: Whether you pay cash in full or utilize a loan, you will one day own the vehicle and be free of payments until you decide to by another vehicle.
  • Insurance: Insurance is usually lower than if you lease a car. Buying a car will give you the freedom to rack up the miles on a vehicle without having to be concerned with financial penalties and/or restrictions.
  • Mileage: As mentioned previously, you won’t have any mileage restrictions.
  • Customization: Feel free to make the car your own, by modifying it to your liking, such as putting in a fancy new speaker system or throwing on a cool decal. When you buy, it is your chance to be creative with your car.

The Drawbacks:

  • High monthly payments: The monthly payments for loans on a new car are typically higher on a purchased car than a leased car.
  • High down payments: Dealers most of the time require a down payment that is higher than an initial lease payment. Meaning the initial out-of-pocket cost is more when you buy a car.
  • Equity: While you make monthly loan payments on your car you bought, you will have very little equity in the car since most of your payments will go to interest rather than principal.
  • Substantial depreciation costs: depreciation can take a big negative hit on the value of your car as you make payments on it. Due to this, as a car buyer, you may find yourself financing a pretty big chunk of the car and you could be in a situation known as an “upside-down” situation. This is where the car reaches a point where it becomes worth less money than what you may still owe on it at a given time.
  • Repair costs: Once your warranty expires, it is all up to you to pay any repair costs that come up.


If you haven’t heard of leasing, it is a process that can seem like it is more geared towards business owners or people who just can’t afford to make the monthly car payments. This isn’t necessarily the case though, and there are great benefits to leasing a car no matter what your career or income status is.

The Pros:

  • Lower out-of-pocket costs: Arguably the best benefit to leasing is when acquiring a lease the money you pay out-of-pocket is clearly lower than when you by a car. There is also little or no down payment and no upfront sales tax charges.
  • Regular change of scenery: With leasing you have get to experience the thrill of owning a new car every few years, for you are basically renting a car for a certain amount of time. Usually 36 to 48 months.
  • Favorable depreciation costs: Because you only have the car for a fixed amount of time, you pay only for the use of the car, instead of gaining the full depreciation cost. This means you will never be in an “upside-down” position with a car when leasing.
  • Tax advantage: Calling all business owners. When you use a leased car for business purposes only, the car may offer convenient tax advantages.
  • Repair costs: Since you are covered under the vehicle’s factory warranty during a lease, you will have low to no repair costs.

The Drawbacks:

  • You are not the owner: While you may have the option to buy a vehicle when the lease expires, depending on the type of lease. During leasing you will always have car payments because you will never own the cars you lease.
  • Mileage restrictions: If you are someone who likes to drive or go on road trips, leasing may not be for you due to mileage restrictions. Depending on the lease agreement, mileage restrictions can range from 12,000 to 15,000 a year. If you go over in miles you can pay anywhere between 10 and 25 cents for every extra mile you go.
  • Higher coverage costs: Insurers typically charge higher coverage costs for leased vehicles, but based on your age, driving record, and place of residence, that additional cost tacked on may be quite small.
  • Additional charges: When you are looking to lease, check the contract for “excess wear and tear” charges or unusually high additional mileage fees that would be paid at the end of a lease.
  • Paying for the most expensive years: When you lease a car you are basically paying for the most expensive years of a car’s life. You pay the difference between the purchase price of a vehicle and the residual, or the predetermined value of a car at the end of a lease period. So, try to steer clear of cars that have a high depreciation rate. Dealers may try to shove more of the depreciation cost towards you, by including an unfairly low residual value. Overall, just make sure you check your mirrors and blind spots when signing up for a lease.

Leasing Options:

  • Closed-End: This lease type lets you walk away from the car at the end of the lease term. If you happen to owe any additional mileage or excessive wear and tear fees, you would have to pay them before walking away.
  • Open-End: Also called an equity lease, open-end leases require you to purchase the car at the end of the lease period for a predetermined amount.  This is the go to lease option for businesses and persons who rack up the miles. Out of these two types, closed-end is recommended because it has less risk when the term expires (Pareto, Investopedia).

Now that you know all of the twists, turns, and straightaways of each route you will be able to make the best decision for yourself as to what road to head down. Sorry for all of the auto puns. If you are still unsure, don’t hesitate to reach out to us to help determine which direction is best for you.