The correct answer to this question depends on your personal circumstances. Buying or leasing a car isn’t just about the money, it is also about convenience, whether you want to be locked into a long or short term payment schedule, and how much you really want to own the car.
Many businesses lease cars because they won’t have to deal with the drudgery of selling the purchased cars once they are finished with them. Once the lease is finished, they return the cars to the car dealer and they are done—quick and simple.
But if you are someone that plans on keeping it for a long time, then buying is the way to go. This can save you money in the end because you will not be buying a new car every few years.
PaymentsIf you lease a car you’ll be paying a monthly installment over an agreed length of time, but there is no interest charge on it. If you buy a car, you’ll have to repay the loan amount, plus interest.
Your payment schedule will also be different when buying or leasing a car. In general, if you buy a car, the loan payments will stretch over 66 months. If you are just leasing a car, the term is only 35 months.
In addition, the average monthly payment for a leased car is $408, while a purchased car is $482 a month.
OwnershipLeasing a car means you return it to the dealer after the contract is up. You can think of a lease as a sort of timed rental, but with restrictions. You’ll be liable for wear and tear that goes beyond what the contract says and have to pay the car dealer for fixing any damage accrued during the time you leased it. It also means you cannot customize or make modifications to the car.
Leasing a car means you only have a limited amount of “free” miles (about 12,000) before you have to pay a per-mile charge—typically 25 cents per additional mile over the allowance.
Purchasing a car means you have the freedom to customize it, modify it, and do what you want with it such as passing it onto your kids, or loaning it to friends or relatives, as long as they are insured. Once you complete the payments, the car is totally yours and you can sell it anytime you want to.
New Car SyndromeIf you get bored of your car in a few years and get the itch to buy a new one, leasing may be a better way to go. Because leasing a car typically is for 3 years, and gives you the option to lease a newer or different model.
But be aware that if you end the lease early, for whatever reasons, there is usually very heavy penalties (read: fees) for breaking the lease.
Source:
State Farm