Is It Better to Buy a Car or Lease It?

by admin on 28/07/09 at 10:57 am

With super low monthly payments, leasing a car can be an enticing proposition. You could get into a nicer car at a lower monthly cost than buying, but is this a wise financial choice?

In general, the answer is no – buying a car is better than leasing it.

But there are a few cases where leasing could make sense:

• If you are self-employed and can write off leasing as a business expense.
• If you absolutely, positively need a new car every couple of years.
• If you need to defer a purchase decision for a few years.
• If the only way you can get into a new car is via a lease.

But there’s a reason why 80% of consumers buy rather than lease their cars. When buying a car you generally will have a 60 month loan after which you own the car free and clear. So if you can handle five years of car payments, buying a car will leave you in better financial condition.

In contrast, with leasing you have to trade in the car every two to three years. While the idea of having new wheels on a regular basis might sound appealing, realize that if you continue leasing your monthly car payments will never end.