Lease vs Buy Car Calculator

Lease vs. Buy FAQs

Is it better to buy or lease a car?

It depends on what your needs are in a car. For instance, if your primary concern is to make the most sensible financial car purchase decision, buy a pre-owned vehicle, pay it off, and keep it for a few years.

Used cars aren't for everyone, however. If you don't want to worry about out-of-warranty maintenance costs, prefer the latest technology, or simply like having a new car every three years, leasing can be the answer. Finally, if a low monthly payment is your primary goal, a lease might be the best approach.

Is it a good idea to lease a car?

The decision to lease usually comes down to your lifestyle and if you're concerned with keeping your monthly payment low in the short term. For example, if you need an upscale car for business, perhaps to entertain clients, leasing allows you to drive a nicer car for less money. It might also provide a good tax write-off. And despite having a lower payment, bear in mind that you will always have that payment as long as you are leasing.

However, if you're someone who tends to stick with the same car for many years, the best choice would be to buy a new or used car and keep it for as long as it is reliable. You'd be payment-free for a few years, which is the point of car buying. That's something people often forget.

What are the pros and cons of leasing versus buying?

Car Lease Pros:

• You have lower monthly payments with a low — or no — down payment.
• You can drive a better car for less money.
• You have lower repair costs because you are under the vehicle's included factory warranty.
• You can more easily transition to a new car every two or three years.
• You don't have trade-in hassles at the end of the lease.
• You pay less sales tax.
• You'll always have the newest technology in your vehicle.
• You don't have to worry about depreciation and resale value.

Car Lease Cons:

• You don't own the car at the end of the lease (although there is always the option to buy).
• Your mileage is typically limited to 12,000 miles a year (though you can purchase extra).
• You may find lease contracts confusing and filled with unfamiliar terminology.
• You'll pay more in the long run for a leased car than you will if you buy a car and keep it for years.
• You could face excessive wear-and-tear charges. These can be a nasty surprise at the end of the lease.
• You will find it costly to terminate a lease early if your driving needs change.

Buying Pros:

• You can modify your car as you please.
• You'll save money over the long term if you buy a car.
• You can drive as much as you like. There's no excess-mileage penalty.
• You have more flexibility since you can sell the car whenever you want.
• You can use the car as a trade-in on the next car you buy.

Buying Cons:

• You have to make a higher down payment to avoid being upside down on the loan (owing more than the car is worth).
• Your monthly car payments are higher than lease payments.
• You're responsible for repair costs once the warranty expires.
• You face possible trade-in or selling hassles when you decide to buy your next car.
• You'll have more of your cash tied up in a car, which depreciates in value.