Overhaulin'

What are the pros and cons to leasing a new car vs. buying one and how do I decide what is best financially?

Public Comments

1. Leasing is a great way to lose money. If you buy the vehical outright and trade it in 3 years later, you will be getting a better deal.
2. Well depending on how long you lease it for, you can have a brand new car every five years (if that is how long the term is leased for) When you buy a car you will have it as long as you want and you can always sell/trade up and get money for it. Its hard to say what is better finacially. My fiance leases and he likes doing that where I make payments to own mine. He has a Mazda 6 (really nice car but payments are like 350 a month, where I drive a hundai which is like 158 a month.) So depending on make/model that makes a difference in price.
3. It's usually better to buy. Leasing does make sense sometimes. For example, if you own your own business you can write off much of the lease payment. Leases are also great if you like getting a new car every 3 or 4 years, if you have Porsche tastes and a Pontiac budget, and/or if you don't mind paying monthly payments. Over the term of the lease, it will cost more than if you purchased the vehicle. It also depends on the vehicle. For example, vehicles with higher residual values are cheaper to lease (compared to others in the same class with low residual values) as they retain more of their value after the end of the lease term. But overall it's cheaper to buy as you don't have to pay interest, and you have an asset unlike leasing. You may pay 1/2 the price over 4 years in a lease BUT you own nothing at the end.
4. If you own a business then leasing gives you a write off. If you are an individual you are better off buying a car so you don't have to replace it in a few years. There are also stiffer penalties for missed or late payments on a lease. We buy used cars that are still under warranty because it is much cheaper than buying a new car and if something is wrong you can get it fixed under the warranty. If there is still at least 30 days and 1000 miles left on the warranty you can extend it. We got good deals on three used cars under warranty through ebay. Check the blue book value before you bid to make sure you are getting a good deal. Also, check the vin number with the service department of the dealer before you bid to make sure there is still lots of time on the warranty. Read all the feedback comments on the seller to make sure he is ethical before you bid.