To Lease or to Buy? Here Are Some Answers to the New-Car Shopper’s Biggest Question

Man examining car in store

Are you in the market for a luxury car? Or a beater? Or maybe something you intend to keep till it’s a beater? Are you dutifully committed when it comes to vehicle-related responsibilities, or are you flakier than a fresh-baked croissant? When it comes to getting a vehicle, there are a lot of moving parts to leasing and financing. The choices you make will vary depending on which car or truck you’re after and even which dealer you visit to make your potential purchase. Setting aside these inner workings, there are some broad things to consider when weighing whether to lease or to buy.

We received some tips from Daniel Blinn, a Connecticut attorney who specializes in automotive financing and other consumer issues. He offered a list of considerations based on what most automakers and dealers offer—and what elements are baked in to what they offer—when you shop for a purchase or a lease. Consider these as guidelines, not hard and fast rules.

Reasons to Lease:


You want a new car for a (relatively) cheaper monthly cost. This is the most common reason people lease cars and trucks. They want the latest model available, and the monthly payments are cheaper through leasing. Professionals who want to project a certain air of success tend to lease for this reason, Blinn noted. One thing to keep in mind, however, is that while the cost of leasing could be cheaper on a monthly basis, hidden fees are sometimes tacked on that actually make it more expensive to lease versus own in the long run.

You don’t want to be stuck with obsolete technology. For the savvier car shopper, this is an interesting point. Especially with the continued spread of electrification, some consumers may want to have the latest technology but fear a vehicle that may get 80 miles of range in the 2018 model year could perhaps already be laughably lacking in electric prowess by 2021. If you lease it, you don’t have to worry about trying to sell a vehicle with obsolete technology.

You don’t put many miles on your vehicle annually. If you don’t drive very often or very far, you don’t have to worry about going over mileage limits, which most leases include—10,000 to 15,000 miles per year are common limits—and which can be costly to exceed.

You are sure you only want to keep the car for exactly the term of the lease. In addition to being charged for exceeding mileage limits, if you decide that you need an early termination of the lease, you are likely to face charges. This does not just happen when someone decides they no longer want the vehicle. Blinn said some people may unwittingly run into this problem if they move abroad or get a new job that provides a company car, for example. “Leases can be a good deal if somebody drives the right amount of miles and wants to keep the car for the right amount of time,” Blinn said. “But if those things change it can be very expensive.” Typical leases run for three years.

You’re looking to go luxe. Luxury marques sometimes have the best lease deals because they want to promote brand loyalty to woo new customers into their products over the long term, Blinn said.

Woman looking at car for sale


Reasons to Buy: 


You put a lot of miles on your vehicle. Several of the reasons to buy are basically the opposite of the arguments for leasing. If you drive more than 15,000 miles a year, you should strongly consider purchasing rather than leasing. Lease contracts almost always come with mileage limits, and if you exceed these limits you can be charged hundreds or even thousands of dollars, depending on how much you surpass the annual cap.

Your vehicle is likely to sustain some injuries. If you’re the type of driver who may accidentally open your door too hard against a brick wall, or if you’re prone to casually swiping the side of concrete posts in a parking garage, you’d probably want to consider buying over leasing. Lease contracts will penalize you for excess wear and tear. So if those inadvertent dents and dings add up, it could be subtracted from your wallet at the end of the lease.

You don’t care how new the car or truck is. Again, this is the complementary argument to the pro-leasing point about wanting a new car. If you don’t care whether or not your car is brand new, you most certainly should considering buying rather than leasing. Even if you’re financing the purchase, you are likely to save money in the long run.

You are not sure how long you want to keep the vehicle. If you buy a vehicle, that means you can sell it or trade it in any time you want without being penalized. Not only that: Whereas with a lease you are paying what’s commonly referred to as a “cost of capitalization,” or funding the vehicle’s depreciation, when you buy a vehicle and finance it, your monthly payments go toward the equity of the car or truck. Once you finish your loan term, that car or truck is all yours, and so is all of the money you get from selling it or trading it in.