Overhaulin' - Should I Lease or Buy a Car?

Should I Lease or Buy a Car?

Hello, This is my first car and I’m conflicted on if I should buy or lease it. I’m 23 years old male living in New Jersey; I received my license back in March 2007. I’m considering buying a Toyota Corolla, or something comparable to that. I have not decided on what insurance to get, but I know considering my gender, age, and state, it will be a bit pricey. Taking a tight financial situation into consideration, I would like to know what would be cheaper as well.

Public Comments

buy
I thiink that you should start out by leasing a car. Then if you end up likeing that, either stick to it, or it would possibly be cheaper to purchase a car.. Tayler.
It really depends on what you're after. Leases are good if you don't drive a lot and you don't want to keep the car after a few years. Buying is best if you plan on keeping the car. Monthly payments are a little bit higher, but overall you pay less than you would leasing.
buying the car might be cheaper, but if you dont have the money on hand a lease is good. Not having to pay a large amount right then. If you get it second hand you could probably talk payments with the owners like if it cost say about 2,000 ask if you can put 500down payment or what ever and keep paying 200 a week or everyother or maybe 500 every two weeks. anyway.. my mom went with a lease on her jeep and she ended up paying a little bit more then she would if she just bought it.
buy, if you lease you never stop paying on it.
There are positives and negatives for both and there is no way to say which option works better for all circumstances. Personally, I always opted to purchase my cars. I do this because I drive too much (over the lease mileage limit) to make lease a viable option, and the fact I like the idea of owning better than renting. (leasing is a long time rent) One thing you might want to really think about is a "tight financial situation" you mentioned. If you lease a vehicle, the lease company will NOT let you out of the lease in the mid-term without significant penalty where as if you bought the car, you can always sell it. If your money is tight, do you really want to buy new? You might want to consider, low mile, recent models, USED. There are plenty of websites that talks about lease vs purchase. You'll get far better idea than asking here.
Leasing (Better known as a Flease) is NEVER a option Leasing a car is a HUGE RIP OFF!! Also please do not make the mistake so many others make and that is financing a new car or for that matter financing a car period buy a car you can afford CASH so what if it a older car , so what if it looks like road kill , as long as it runs. i started out years ago with a beater , and saved my money then sold that car and moved up and so on , this past November I bought a 2008 Toyota Tundra and paid CASH . visit this website about why and how to stay out of debt http://www.daveramsey.com
If you are in a tight financial situation, you are better of buying a semi-used vehicle upfront, with cash so you can avoid payment. There is a general misconception that leasing is cheap than buying. That is only true in the shortrun. If you keep cars for 6+ year, buying will always be cheaper than leasing. Leasing requires excellent credit, little money upfront, higher insurance coverage and limited usage. The upside is that you usually get more money for the car and you are always covered under warranty. Getting off a lease is usually expensive, but you choices are pretty much the same if you where buying a car and financing it. If you find yourself having a hard time with the payments, you will either have to trade it in or selling it (yes you can sell a lease, but you are responsible for the difference between your cars BUYOUT price and the actual sale price of the car). The other option would be doing a lease swap using a company like swapalease.com.
buy then you have something later on
Leasing can be good for the right people. Essentially, in a lease, you never "own" the car. You make payments for 2-3 years, then hand the car back. Think about it almost like a long-term rental. There are some advantages to leasing under the right circumstances. First, if you trade out of cars every 2-3 years, it might be right for you. In a lease, you have a contract for a fixed amount of time. I discourage leasing past 3yrs - 2 is better. In a 'loan', after 2 yrs, if you try to trade you will probably be upside down, and owe more than the car is worth. So, in order to get out of it, you have to have a lot of cash, or finance that negative on the next car. The contract will tell you that your payments are $x per month plus tax. At the end of the term, you will have a residual value for the car. The lease company basically says "In three years, we feel this car will be worth $Y" You have the option to buy the car at the end of the lease for that amount. If you are in love with the car, or it is worth well above the residual, you may want to consider that. However, in most cases, you simply hand over the keys and walk away. In a lease, there is a specified amount of mileage. Most leases are constructed around 12K or 15K miles per year. If you go over the mileage, there will be a per-mile penalty at the end of the lease. So, if you drive a lot, it may not be for you. Leasing typically allows a person to get a nicer car for the same payment as a lower-end car on a loan. that is because of that residual. You are only "financing" the difference between sales price and residual. In a loan, you are financing the entire purchase price. In other words, if a car has a sale price of $25,000. on a three year lease, lets say the residual is $15,000. You are only "financing" $10,000 for 3 yrs. If you were to buy that same car, you would finance $25,000 either for a longer term, or a much higher 36 month payment. Lastly, in a lease you pay less sales tax. In a conventional purchase on that $25k car, you pay tax on the whole 25,000. In a lease, you pay sales tax on the monthly payment. In other words, your payment of $300/month is actually $300+sales tax. BUT you are only paying tax on the leased amount - in the earlier example you are only paying sales tax on $10,000. To those who say "never lease" -- read this forum for 30 mintues. For every lease 'horror story' you read, you will see 20 people who are upside down on a 6 yr purchase and no way out. The key is to be thoroughly informed about the pros and cons of both, and make an educated decision based on your needs and lifestyle. Times leasing is good: You trade cars ever few years, you dont drive more than 12-15k per year, you want to put less down Times it is bad: You like to keep cars a long time, you drive a lot, you want to put a lot of cash down. Hope that helped some