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Should I Lease or Buy a Car?

calendar iconPosted: August 24, 2021
person buying car at dealership

Need a new set of wheels, but you’re on the fence about whether you should lease or buy a car? Determine your budget and understand your options so you can make an informed decision.

What is the Difference?

When you lease a car, you are essentially renting it. You have a contract with a dealer and make monthly payments. Once your contract is up, the car goes back to the dealership. When you use an auto loan to buy a car, you make payments to a lender for a set term until you own the car.

The Pros and Cons of Leasing

Love driving the newest cars with all the bells and whistles? You might be able to lease a newer, more luxurious car than you could afford to buy. You will also likely have lower monthly payments with a lease. Your maintenance costs will depend on what is included in your warranty plan, so be sure to read your lease contract carefully. You may have to pay a penalty for exceeding mileage limits, and you will have restrictions on how you can modify the car. You also won’t have any equity and will need to pay monthly payments as long as you continue to lease. Additionally, if you want to end the lease early, you might have to pay a fine to break the contract. For most people, leasing a car will end up costing more in the long run, but it may make sense for some business owners who can claim certain leasing costs as tax deductions or for people who want a new vehicle every few years.

The Pros and Cons of Buying

Owning your vehicle gives you the freedom to drive as much as you want. You can road trip across the country without fear of mileage limits. You can also customize the car to your tastes. You can upgrade your stereo system, tint the windows or put on snow tires. You will need to budget for maintenance costs, and your monthly payments will likely cost more than leasing. However, once your loan term is done, no more payments! And even though cars do depreciate over time, you will have equity in your vehicle, unlike a lease. You will be able to trade in your current car to defray the cost of your next one.

Still not sure which option is best for you? Plug the numbers into our Lease vs. Buy Calculator. Compare monthly payments as well as the total costs over several years. If you decide you’re ready to buy a car, we can help with the financing. Check out our low auto rates and get pre-approved for a vehicle loan. We also encourage you to check out our Dealer Locator so you can work with one of our preferred dealerships for a smooth and easy loan process.

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