Should i lease a car or buy one?

Question

What are the differences between leasing and buying a car except of the fact that when you buy it you own it. What is a better option and why?

Thank you for answering

Answer 1

First off let me say that when you "buy" a car you dont own it if you get a loan, the bank does. The only time you own the car is if you pay cash or pay off the entire loan.

If you buy a car and get a loan you will be in trouble when you go to trade it in if you havent paid the entire loan yet. No car is worth what you owe on it unless you put ALOT of cash down when you buy it, and I mean ALOT of cash. So unless you plan on keeping the car for longer than your loan you will actually be worse off when you go to get rid of it than if you lease it.

When you lease you have no obligation at the end of the contract, so even though the car isnt yours at the end you are not in the hole. You will have the option of buying your leased car at the end of that lease, wether or not you should do that depend on what the car is worth vs. what your buyout is, sometimes the car will actually be worth the buyout, but most times it isnt. The things you have to watch out for when leasing is your miles, you really dont want to go over the number of miles you pay for in the lease, so be sure to give yourself enough room on the miles. If you buy the car at the end of the lease the miles dont matter but the car will be worth less with all those miles so its a toss up. You also have to be SURE that you will keep the lease car for the entire contract, most of the time if you try and trade in a leased car early you will be WAY in the hole and get killed. I recomend only leasing for a short term, no more than 2-3yrs, say you get married and have kids in two yrs now your stuck with a little sports car with no backseat, your screwed.

All in all if your going to keep the car for longer than the loan and you can afford the higher payment then buy it, its the much better choice, after your done with the loan you will be able to use it as a down payment on a new one, and you dont have to worry about how much you drive or beating up the car.

If your the kind of person who's going to want a new car in 3yrs and you know about how many miles your going to drive then lease, just make sure you dont go far over on your miles and you take care of the car. Leasing will get you a lower payment.

Answer 2

for most people buying a car is a better option.  you'll end up with equity when you are done and you can drive the car as much as you like with no penalty.

Answer 3

Leasing is better for people who have settled down and won't likely want to end the lease early. Leasing is designed to be completed as scheduled, and that's where many people have a problem with leasing -- when they decide they want out or want another car before the lease is completed. It's expensive and troublesome to end early.

Leasing is best for people who drive only an average number of miles -- about 15K miles per year, take good care of their cars, and don't want to customize their cars.

Leasing has lower payments than buying with a loan -- same car, same term -- but the tradeoff is that your payments only pay for the car's depreciation over the time of the lease. Unlike a loan, you don't pay extra money each month to build up some ownership equity.

Even with a loan, a car depreciates and you never get back or "own" nearly as much as you paid in to it. The amount lost to depreciation is the same amount that someone who leases has lost. Cars don't distinguish whether they are being purchased or leased.

A simple example would be someone who leases and pays $300 a month for a $20,000 car for 3 years. For the same car, same time, buying with a loan would be about $600 a month. The value of the car depreciates to about half it's original value in 3 years. Therefore the person who leases returns the car, now worth $10,000, to the lease company after 3 years but has no owership, because they only paid half as much per month. The person who bought with a loan, paid twice as much per month now has ownership in their car, but it's only worth $10,000. Half their monthly payment has gone to depreciation, and half to building ownership equity. This example is a little simplified but makes the point.

Generally, leasing is not a good idea for someone who has just graduated, has a lifestyle that is likely to change (get different job, get married, have children), where mileage can't be predicted for the coming few years, and may want to hold on to their cars for a few years until finances improve.

Good luck.

Answer 4

for an individual you should buy. leases are certain purposes..1 a bisiness can tax deduct 100% of a lease.  2 some people want a new car every couple of year and dont want the hassle to buy and sell the cars and the pay a lot extra for that luxury. 3 people who are poor money managers and want a more expensive car than they afford,that is living beyond their means!!! many, many ,many people are so unhappy they took a lease.but once done you cant reverse it.  THIS IS NOT A GOOD WAY TO BUY A CAR!   IN REALITY YOU ARE ONLY RENTING IT.THEN WHEN YOU ARE DONE RENTING IT(3 OR 4 YEARS) YOU CAN CHOOSE TO BUY IT FROM THEM OR TURN IT IN AT THE END OF THE LEASE.  AT WHICH TIME YOU WILL BE CHARGED FOR ANY EXTRA MILAGE AND COST FOR ANY MINOR DAMAGE TO THE CAR. LITTLE DENT, CIG BURN ETC.(REMEMBER YOU ARE ONLY RENTING  IT)  THEN  AT THE END OF THE LEASE YOU CAN BUY THE CAR FOR FAIR MARKET PRICE(YOU BUY YOUR ON USED CAR)..DONT DO THIS!!!!     TO ANSWER THE THE SECOND PART OF YOUR QUISTION::: BUY A USED CAR YOU CAN AFFORD .NOT JUNKER ,BUT VERY GOOD USED CAR AT THE RIGHT PRICE.IT TAKES SOME EFFORT BUT WELL WORTH IT. IF YOU LEASE YOU WILL HAVE NOTHING FOR ALL THE THOUSANDS YOU HAVE PAID...IF YOU BUY NEW THE NEXT WEEK YOUR CAR WILL WORTH 75% OF WHAT YOU PAID FOR IT,NOT GOOD MONEY MANAGMENT!!UNLESS YOU DONT CARE.. IF YOU BUY A CLEAN CAR 3 TO 5 YEARS OLD WITH LOW MILES YOU CAN DRIVE IT FOR MANY YEARS WITH FEW PROBLEMS .  HAVE A FRIEND HELP YOU LOOK.BUY SOMETHING THAT GOOD FUEL MILEAGE .GO ON LINE TO (BLUE BOOK) TO FIND AVG PRICE OF USED CARS THAT INTREST YOU.FOR A STARTING PLACE.YOU CAN FIND REALLY GREAT CARS FOR 5 OR 6 K..  I JUST BOUGHT(6 MONTHS AGO) A REALLY NICE 1999 S10 BLAZER WITH 125000 MILES $3200 FROM USED CAR LOT with 30 day warrenty. MOST OF THEM WILL FINANCE YOU IF YOU NEED. JUST BE SURE IT IS A GOOD USED CAR DEALER NOT ONE OF THE SLEASY ONES. IF YOU HAVE CASH .BUY ANY WHERE. USED CARS AT NEW CAR DEALERS ARE PRICED WAY HIGH ,THE PAY THOSE COMMISSIONS.  IT WAS PROBOBLY. A NEW CAR DEALER WHO WANTED TO CON YOU INTO A LEASE IN THE FIRST PLACE. DONT LEASE ,,DONT BUY NEW, BUY SMART  ALSO YOU INSURANSE WILL MUCH HIGHER ,ANOTHER WASTE OF $.  SOME CREDIT CARDS WILL GIVE YOU A CASH TRANSFER TO YOUR BANK  .MY VISA CARD GAVE ME 18,000 @ 4.99% FOR THE LIFE OF THE LOAN FOR ME TO BUY A  PROPERTY .THEY JUST PUT IT IN YOUR CHECKING ACCT. JUST A PHONE CALL ALL IT TOOK. I HAD THE CASH BUT DIDNT WANT TO USE IT.  WELL I HOPE I HELPED YOU. DENNIS [e-mail]   let me know if you any other quesion  im 56 and been there done that ,,be smart and be happy,be lazy and you wil pay for it big time. do your home work and get a great car for a small price. A LOT RICH PEOPLE DONT BUY NEW CARS .  TO SPEND A LOTS OF MONEY ON A DEPRECIATING ASSET  NOT WISE. !!!!

Answer 5

lease- usually cheaper payments, but you may pay more in the long run. Consider how the lease ends - you can buy the car then or walk away. You can get a new car more easily in only a couple years, if that's important to you. You can't customize the car. You have limited mileage unless you want to pay extra.

buy - better if you want to keep it for a long time. You can do whatever you want to the car, and you will pay less if you keep it for a while. Not as good if you need a new car in only a couple years.