buy-a-carThe very mention of leasing versus buying a vehicle sparks a lively (and, at times, heated) debate among both consumers and sales professionals. Some people swear by leasing, while others believe it’s a scam and buying is the only way to go. In reality, both leasing and buying have true advantages. It depends on what your personal situation is, because both can be a good decision or bad decision in the right circumstances.

The Pros of Buying 

When you buy a car, whether new or used, you eventually get the vehicle paid off and no longer have to make payments. The car retains value, which can be used as a down-payment on your next vehicle or even collateral on a loan. There are no limits on the number of miles you can drive, and no fretting over mishaps like a spilled cup of coffee, the kids dropping their Happy Meal fries, or the new puppy chewing the door handles. Buyers can modify the vehicles and add any accessories they like, and insurance premiums are generally lower for buyers than lesees.

The Cons of Buying 

The downsides to buying include higher payments and higher down-payment. Cars, especially new ones, depreciate quickly, so the car won’t be nearly as valuable a few years from now, yet you’ve still paid for the newer version of your vehicle. Also, after a few years the car will likely begin needing repair work that is no longer covered by the manufacturer’s or dealer’s warranty.

The Pros of Leasing 

Lesees can usually get considerably lower payments for the same vehicle than buyers, and make little or no down-payment. There are no tax fees up front like buying requires, and the lesee never has to worry about the value of the car declining due to depreciation. Those with credit issues can often get a lease when they don’t qualify for a loan, and it’s usually cheaper for those with shaky credit histories. Business owners can deduct the full cost of a leased vehicle from their taxes, whereas buyers can only take a percentage of a vehicle’s depreciation off on taxes due.

The Cons of Leasing 

Lesees usually pay higher insurance premiums, and they are always stuck making payments because they never have a vehicle that is totally paid for. A lease also comes with a limit on the number of miles you can drive, so people inclined to take road trips find it cramps their style. Also, if there is excessive wear and tear (according to the lease company’s determination), such as that coffee spill, the kids’ French fries, or the puppy’s teeth marks, those costs add up quickly at the end of the lease.

How You Can Decide Between Buying vs. Leasing 

So, putting all this information together, it makes more sense to buy a car if:

  • You can afford the down payment, higher payments, and insurance premiums and look forward to being free of a car payment one day
  • You keep vehicles a long time, and use them as a down-payment for your next vehicle years later
  • You have pets or children who tend to mess and spill
  • You travel in your vehicle and need unlimited miles

But these people would be better off leasing:

  • Those with problematic credit histories
  • Business owners in need of a tax deduction
  • Those who can’t afford large down payments and higher payments
  • People who buy cars every few years
  • People who drive very little and are more concerned about driving a more expensive vehicle than eventually owning one

Neither option is right for everyone or wrong for everyone. It all depends on your personal needs and desires.