Lance Knaack, CFP®, Associate Financial Planner
November 9, 2023
Buying versus leasing a vehicle is a common dilemma for many drivers getting a new car. Associate Financial Planner Lance Knaack provides the pros and cons of leasing versus buying a vehicle.
Buying a Vehicle
- Ownership. You own the vehicle and will build equity with monthly payments (assuming you finance the purchase).
- There are no mileage limits.
- You can sell or trade at any time.
- You can customize or modify your vehicle to your choosing.
- There are higher upfront costs or higher monthly payments compared to leasing.
- You are ultimately responsible for maintenance and repairs.
- Unfortunately, vehicles will likely depreciate over time.
Leasing a Vehicle
- Lower upfront cost and lower monthly payments compared to buying.
- You get to enjoy driving a newer vehicle every few years.
- You do not have to worry about selling or trading in the vehicle at the end of the lease term.
- Many leases match up with the manufacturer’s 3-year or 36,000 mile factory coverage so you don’t have to worry about mechanical or electrical repairs as they may be covered by the manufacturer.
- You must abide by the mileage restrictions.
- There is the possibility of excess wear-and-tear charges.
- You do not own any equity in the vehicle.
- You may have to pay fees to terminate a lease early.
- You are responsible for any damage and routine car maintenance.
In the end, the decision to lease or buy a vehicle depends on your personal financial situation. You should take into consideration the many pros and cons of each option.
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