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Buying vs. Leasing: What’s right for me?

If you’re like me, you probably despise dealerships and anything that has to do with car shopping. It can be a stressful, overwhelming, and intimidating experience for some, but it doesn’t have to be! What has helped me become more confident in the car shopping world is researching! Sitting down and understanding the value of a new/used car, how depreciation works, how to negotiate price value and more has given me the necessary skills I need whenever it’s time to buy a car. Before I get into this blog’s topic, I must say, while I am no expert in the car shopping field, I can tell you that the first thing you absolutely need to know about car shopping is that you have to have an enormous amount of patience. You’re probably not going to get the first car you test drive, and that’s okay! Don’t let that bring you down, just keep looking.

So, the question becomes, to buy or to lease? I have had experience with both, and each one has its own benefits and detriments. But first, let’s discuss what it means to buy a car. To buy a car means that you will own the car. People either pay cash for a car, or likely finance the car through their financial institution. Others will get a preapproval amount that will tell them how much the lender is willing to give them upfront before they even go into a car lot and start looking for a car; this gives the individual a better idea of what they will actually be able to afford. On the other hand, when you lease a car, you are signing a contract stating that you will make monthly payments for the term of the lease (on average that is three years). Once the lease expires, you will not own the car (think of it like you are renting the car); unless you do a lease buyout, which comes with its own pros and cons.

Now that you know what it means to buy and lease a car, let’s look at the pros and cons of each.

The Pros and Cons of Buying a Car:

Pros: 

  1. You are the owner of the vehicle
  2. Lower tax and insurance premiums on used
  3. You will not be charged on excess wear and tear
  4. Warranty
  5. You are able to use your car as a trade-in

Cons: 

  1. Higher down payment 
  2. Higher monthly payments (unless paid in cash)
  3. Depreciation
  4. You are responsible for repair cost once the warranty expires
  5. Possible trade-in or selling issues when you decide to get your next car (unless you plan on running it to the ground) 

The Pros and Cons of Leasing a Car

Pros:

  1. You get to drive and show off your brand-new car
  2. You will get a lower monthly payment with a low or no down payment in comparison to buying a car
  3. No trade-in hassles at the end of the lease
  4. Lower repair costs
  5. You are able to transition into a new car lease after you current lease expires

Cons:

  1. You will not own the vehicle at the end of the lease (unless you buy it)
  2. You may have to pay penalty fees for exceeding mileage limit 
  3. You will pay more on the long run for a leased car than you will if you buy a car and keep it for years
  4. You could face excessive wear-and-tear charges
  5. It will be costly to you if you terminate your lease early

So, are you a car expert now? No? Yeah, me neither, but hey! Remember what I said in the beginning? Research, research, research! Go online and find other resources that will help you get a better understanding about the best option for you. Still not convinced? Make an appointment with one of our counselors by visiting our website https://financialwellness.utah.edu/ At the end of the day, make sure you make the decision that is right for U. What is good for one person, does not necessarily mean it is the right choice for you! Whatever you choose, know that we will be right here to answer any questions you may have!

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Last Updated: 8/5/20