Buying vs. Leasing A Car: The Pros and Cons
When you’re shopping for a new car, a common question you’ll ask is “should I buy or lease?” In the 90s, the answer was more straightforward for Gen-Xers than it is for us millennials today. The rise of technology, the gig economy and other disruptors have altered landscape for millennials. Before you part with your hard-earned savings, take a look at the pros and cons of buying and leasing in today’s world to help you make an informed decision.
Understanding Leasing
Buying and leasing a car are similar in many ways, but there are some key differences. The most important one is a car loan is based on the full price of a new car, while a lease is based on a percentage of the car’s price, which is the difference between the car’s full price and what it’s expected to be worth at the end of the lease. As a result, leasing has become increasingly popular with millennials as it affords them the ability to drive a luxury car with the latest tech they couldn’t afford otherwise. Leasing also prevents them from investing in a depreciating asset.
Understanding Buying
When you buy, you own the car when the loan is paid off. As you make payments, you gain equity in the vehicle. If you plan on keeping your vehicle as long as possible, buying may be the right choice for you. You can also customize your car as you wish, unlike a leased vehicle, which must be returned in its original condition at the end of the lease.
In a nutshell, leasing allows you to get more car for less money in the short term. However, in the long-term, leasing will eventually be more expensive because you will always have a car payment and never own a vehicle. As with any major purchase, do plenty of research to determine what works best for you before you make your decision.
Happy shopping!
