For most of us in the US today who do not live in the middle of populous cities, driving a car from place to place is a way of life. Some of us share a car with a parent, spouse, or friend. Some of us choose to rent cars by the week, day, or even hour as we need them. Those of us who don’t are faced with a major financial decision every 3-15 years: should you lease your next car or buy it?
The car buying experience is not one that many people enjoy. Neither is leasing, for that matter. You generally start by doing some research online. You identify what you need from the car in terms of size, capacity, fuel economy, etc., and then look at different makes and models. Maybe you read some reviews on Consumer Reports or Kelley Blue Book to get a feel for quality, dependability, and price. Then, once you have an idea what kind of car you’re really looking for, you start to look at the economics.
How much do want to spend? New or used? Should you finance it or pay cash? And then the grand question: what about leasing a car?
Leasing a car would require less money down, which probably means you could be driving a nicer car. Yes, you’d have a mileage limit, but who knows what your life will be like in 3 years after a lease would end? Would you still want to be driving the same car anyway?
There are several moving parts surrounding the whole “lease vs. buy” decision. This post will discuss the economics of the decision, as well as the pros and cons of leasing vs. buying a car.