Should You Buy or Lease a New Vehicle?

Car leasing is growing by leaps and bounds, and it’s understandable why. The costs of new cars, trucks, and SUV’s have grown steadily over the past several years. Therefore, it’s more economical to lease a new vehicle instead of buying one. Especially since vehicles have a shorter estimated life span than they used to have. I can remember when you could buy a brand new car or truck and drive it with the odometer reading well over a hundred thousand miles. It’s estimated the new vehicles that are being manufactured today will last about six years.

Leasing, or renting a vehicle for a long period of time, is an affordable way for many Americans to drive a brand new car, truck, or SUV. Leasing terms are always written in months, and they usually run from twenty-four months to forty-eight months.

If you want to change vehicles every two years or so, it can be a relatively easy business move to turn your current car, truck, or SUV back into the dealership. As long as you have met your contractual obligations, you can drive out the same day with another brand new leased vehicle.

Basically, when you lease a car, truck, or SUV, you’re responsible for gasoline, oil changes, lube jobs, tires, and all other maintenance and upkeep. You also have to pay for license plate renewals, insurance, and the rest of the costs associated with driving a vehicle.

This type of transportation arrangement is especially beneficial for people who drive their vehicles for business purposes. There are tax breaks they can take advantage of.

However, there are disadvantages of leasing a vehicle instead of buying a new one. For example,
the terms of a vehicle lease agreement can restrict your use of the vehicle. There is most always a mileage limit. You’re allowed to drive the leased vehicle for a certain number of miles every
calendar year. Exceed that amount, and you’ll be charged for the excess miles.

On the other hand, when you purchase a brand new vehicle, the lending institution loans you the money and places a lien on your title. You then make payments on the loan until it’s completely paid off. You’re responsible for all of the costs associated with driving a vehicle, of course, just like in a leasing contract. But, you can drive your car, truck, or SUV as many miles as you choose to every year.

Once the loan is paid off, the bank or credit union removes the lien, and the vehicle is completely yours, free and clear. You can then keep it, sell it, trade it off, give it away, or do whatever you want with it. Your loan payments have turned into equity in your vehicle. But, lease a vehicle, and, at the end of the lease, you will still owe money. You can turn the vehicle back into the dealership, or, you can purchase it, but the price is often pretty hefty.
As you can tell, there are both pros and cons to leasing or buying a new vehicle. The final decision will depend on your financial status and your personal situation. Myself, I’ve never leased a vehicle because I like to outright own my cars. Plus, I’ve heard more horror stories about leasing than I’ve heard praises. A friend of mine leased a 2000 Ford Explorer. By the time it was four years old, it was falling apart, and it needed expensive repairs. But, her lease wasn’t up yet. So, my friend decided to terminate her existing lease and rent a new Ford Explorer instead of paying for the repairs. She ended up “buying” her old lease out and paid “Early Termination Penalties.” The whole deal cost her several thousand dollars. Between the old lease and her new lease, she ended up with high vehicle payments that she couldn’t afford to make.

In conclusion, don’t just lease the first vehicle you see. Compare vehicle makes, terms, and rates first before you make a final decision. Then, when you’re ready to make the commitment, read the entire contract. Make sure that you understand it before you sign on the dotted line.