After you’ve done some initial automobile homework and established a few ideas of what you want and how much you are able to spend, it’s time to move to the first critical question on the quest to get your new car: should I buy or lease my next vehicle? There are several general rules of thumb out there, but we will try to break down some of the biggest factors that go into making the right decision for you.
Should I Buy or Lease the Vehicle?
Many people often begin by considering the financial comparison of the two, trying to decide which makes the most economic sense both now, and over the long term. To give you an example, the car buying guide Edmunds completed an evaluation of the costs of leasing versus purchasing a car over an extended period of time and uncovered some interesting results.
The sample car used was $20,000 with 3-year financing or a lease at 6 percent interest. Including monthly payments, down payments, insurance, maintenance, and taxes, the five-year total of owning the car was $32,388 and the cost of leasing the car was $32,140.
Now, this may lead some to believe that leasing is the lower cost option; however, this was only over 5 years. When Edmunds extended this study out to 10 years, the cost of owning the car totaled $43,000 all-inclusive, and leasing over that same 10 years totaled over $64,000 (and the driver still would own nothing).
But before you jump to either conclusion on which is better, it is important to remember that the decision is not always a purely financial one. Both options may work for many people, and understanding your individual situation is essential to making the right decision.
We cover both topics in detail over the next two articles.
Next up, leasing a vehicle.
