Should I lease or finance my next car?

MsThang27 08/20/2017. 12 answers
Cars & Transportation Buying & Selling

I’m on the fence about whether I should buy or lease a vehicle. I know that financing is the best option because in the end you will own your vehicle whereas leasing is like a long term rental. I’m in the market for a new car but I’m really conflicted about whether I should lease or finance. I guess my biggest...

12 Answers

starplunep 08/06/2017.


Dan B 07/30/2017.

Leasing is generally not the best option for private "ownership". These are some of the things you have to be watchful of to avoid surprises.

1. Some leasing contracts require you to carry considerably more than the minimum liability insurance. They don't want you to file BK due to an accident that your insurance won't fully cover. Collision/comprehensive is required in any case. If you're involved in an accident even if the car was fully restored, that might automatically reduce the residual value (costs you more money at the end of the lease period). Not many people want to buy a car with an accident history because of unknown damage..

2. You are limited to the miles you can drive. In my case, if I were to lease, I could only drive my car to & from work plus local errands. No long distance driving for vacations. 12,000 mi/yr doesn't give me much room. You make up that difference with $0.25/mi over the limit.

3. THEY determine if there is too much wear and tear at the end of the lease. All four tires must be the same brand and tread pattern. You might even have to pay to have the car detailed to make it ready for resale. More money at the end of the lease might be needed.

4. Some states add sales tax to each monthly payment. Other states require 100% of the sales tax on the car at the beginning of the lease period (as you would do if you bought a car).

5. Leasing is always in favor of the dealership. As you near the end of the lease, you need to look at your options to replace that car. You are now a captive audience at the dealership.

6. You must maintain the car according to the manufacturer's schedule and be able to prove it has been done. Otherwise, THEY may determine that the residual value is less than anticipated. You make up that difference with more money.

7. There may be hidden fees that are not part of the advertising. Lease acquisition and end of lease termination fees might be applied.

8. If you buy a car, you might be able to get out from under it by selling it to someone who's willing to take over the payments. Leasing contracts are much harder to terminate. They determine if they even want to transfer the contract.

KayleenR 07/30/2017.

Lrasing and financing are both bad ideas. As you say if you leas, the car will neber be yours, and if you finance you are paying 4 times more than the car is actually worth. If you do not have the money to pay cash, dont buy it

Love big words 07/30/2017.

Pay cash, you'll never regret it.

mccoyblues 07/30/2017.

You admit that you know financing is smarter than leasing. So why is this still a question?

Nobody is forcing a you to keep a car for 8 years. You can sell a financed car after 3 years and still come out ahead.

Poppy 07/30/2017.

The only way to come out ahead with leases is to swap for a new car ever year or so. If you plan on driving it for years you loose money on a lease.

MsThang27 07/30/2017.

So that's the thing, I currently live in NYC. I don't drive much. In fact I hardly drive because I take the train during the week. I mostly drive on weekends. But I'm looking to relocate and I'll have to drive to work in a new city but I still have no idea how many miles I'll put on the car yearly. To give you an idea. I had a jetta for 3 years. I only put 7000 miles on my car in 3 years. Weekends I just drive my daughter to dance, super market. I drive mostly in the neighborhood. The most I drive is 20 miles within the city unless I'm driving out of state which is rare.

Murzy 07/30/2017.

when leasing you get a new model every few years and the payments are lower. just remember, you usually have to put down a nice chunk of money on the lease which you won't get back.

oklatom 07/30/2017.

Do you want to own a vehicle or rent miles? Those are the differences.

mickster440 07/30/2017.

If nothing cautious of how many miles per yr. you drive, so you don't get penalized for going over if you lease.

Skoda John 07/30/2017.

All money on a lease is gone yiu go have nothing.

Do not pay for a car over 5 or 6 years.

Rules for financial happiness.

Put down at least one third.

On a new car the rest in at most 3 years ot rhe waranty period if that is less.

On a used car. Again at least on third down. The balance in 18 months or less.

Do not ruin your finances for a tin box.

Texperson 07/30/2017.

We lease. Advantages: Lower monthly payment. New car every three years. Avoid repair and replace items as cars age. Always have the latest, safest new technology. If you don't love the car, you know you can replace in a few years. Dealers will often replace after only two years (even on a 3 yr. lease) if you are getting the same brand, with no penalty, same payment, new car.

Disadvantages: You have to be a low mileage user, leases aren't for over 15K per year. You don't own, have no equity. You can't alter the car at all, no personalization, it has to be returned to lessor in same condition as when you got it, they will dock you money for any other than normal wear and tear.

We've been leasing for over 20 years and like the idea of never driving an old car.

So basically if you don't put much mileage on a car, you take care of it very well, you don't like to add accessories and things to it and you are OK without having equity at trade in, do it. If not, buy.