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St. Mary's Credit Union BlogLeasing or Buying Your First Car, Pros and Cons

Leasing or Buying Your First Car, Pros and Cons

Are you considering buying your first car and wondering about leasing? It’s a tough decision. You can ask your friends on Facebook what they would do, but you are very likely to get very different answers. 

- Leasing is great... No, buying is better.

Leasing or Buying Your First Car, Pros and Cons - Image

The reason for this very clear contradiction is not a mystery. Leasing or buying is a very individualized decision. It doesn’t really depend on what your friends of family think. You can put it to a vote, but you will not get the right answer. And you certainly won’t find the answer on the Internet — although at this moment you are reading this on the Internet. The decision to lease or buy comes down to one thing and that’s - You.

What’s important to you? This is what you must ask yourself, as we look at the pros and cons of leasing and buying.

Leasing 

Pros

Lease and Down payments tend to be lower- if you’re on a tight monthly budget leasing may be a good option for you. If you are worried about depleting your savings account to lease a car, don’t be. And you don’t even have to know how to get a car loan.

You can afford a nicer car - since the payments are lower for same car, you could spend more and go nicer.

It’s easier to upgrade - If you must always have the newest and best, leasing makes it easier to change cars every few years when your lease runs out.

No sell worries when the lease is up - you don’t have to put your car on Craig’s list or go through the hassle of selling it. You just turn it in when the lease is up and move on. No strings attached.

Just walk away or get into the driver seat of your new car.

 

Cons

The car isn't really yours - You can’t use it as collateral. You can’t legally sell it if you needed the money.

You’ll always have a car payment - As long as you continue to lease, you never actually pay it off. It’s like rent.

You may have to pay more - If you go over the mileage on your agreement or the car is damaged when you return it, then you will have to pay extra to settle the agreement.

You’re stuck in a contact - You lose your job and can’t make the payments, too bad. It’s a contract and getting out of it will cost you.

Buying

Pros

You actually own the car - Once you have paid it off, it’s yours. Depending on how new it was when you bought it, it may be worth several thousand. You can sell it or continue to drive with no payment. Since you will own the car, and used cars are a much better value, when buying your first car, it is important to review a used car buying checklist before making this decision.

No perpetual car payment - Once it’s paid off, you can spend that money on something else.

You have the control - You decide how many miles you drive and whether to fix damage. This does not cost you extra money, except through depreciated value on your car.

 

Cons

Payments may be higher - This is because the car is actually yours once you pay it off.

It’s harder to upgrade - If you want to upgrade, you have to sell it or trade it in. Hopefully you used a used car buying checklist so it held its value. If you upgrade frequently, then you are probably losing money.

You are in control - If you forget to have the oil changed and blow up the engine, the extra money you spent to actually own the car was wasted, but on the flip side you’d have to pay the leasing company for a blown engine, so you are probably about equal.

So should you lease or buy?

As you can see this is a very personalized decision. Considering your own situation, desires and needs will help you make the right decision for you.

Related: The 10 Best Back-to-School Cars

New & Used Car Buying Checklist - Download Now!
 

Source

http://www.consumerreports.org/cro/2012/12/pros-and-cons-of-leasing/index.htm

http://www.edmunds.com/car-leasing/should-you-lease-or-buy-your-car.html

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