By Jennifer Tucker
October 7, 2024 | 4 Min. Read
There are a lot of factors to consider when deciding whether to buy or lease a car, including your lifestyle, preferences, and driving habits. Both options have advantages and disadvantages, and understanding your options can help you make an informed decision that fits your financial goals.
Here, we’re exploring the pros and cons of buying and leasing a car and helping you determine how to weigh your priorities before making a choice.
When you buy a car, you own it outright once your loan payments are complete. This option offers several advantages but also comes with long-term responsibilities.
Leasing a car is a lot like renting it for a fixed period, usually 2 to 4 years. At the end of the lease, you’ll either return the car or have the option to buy it. This option comes with benefits but also some restrictions to be aware of.
Comparison at a Glance
Buying | Leasing | |
Ownership | You own the car when you pay off the loan | You don’t own the car unless you opt to buy it at the end of the lease |
Upfront Costs | Higher (fees, taxes, down payment) | Lower (initial fees, possible down payment) |
Monthly Payments | Higher | Lower |
Mileage Limitations | No | Yes (exceeding limits incurs fees) |
Customization | Yes | Not allowed |
Long-term Costs | Potentially lower if you keep the car long-term | Potentially higher due to continuous leasing |
Maintenance Costs | Higher after warranty expires | Lower (under warranty during lease term) |
End-of-Term Options | Keep, sell, or trade in | Return, renew lease, or purchase |
Deciding whether to buy or lease depends on your driving habits and preferences and how long you plan to keep the car. If your priorities include low monthly payments and driving the latest model, leasing may be for you. But if you want to build equity and own a car for many years, buying may be the better option.
Short-term vs. Long-term Costs. Leasing may cost less in the short term, but buying may be more affordable if you plan to keep the vehicle for the long term.
Equity vs. No Ownership. Buying a vehicle adds an asset to your portfolio. Leasing doesn’t provide you with ownership unless you choose to purchase the car at the end of your lease term.
Stability vs. Flexibility. Buying offers stability with no obligations after your loan is paid off, while leasing offers you the flexibility to drive a new car every few years.
High Mileage: Buying might be more cost-effective.
Low Mileage: Leasing could have advantages.
How much can you budget for monthly payments?
Lower Budget: Leasing offers lower monthly payments.
Higher Budget: Buying gives you ownership and something to show for your investment.
Yes: A warranty for the duration of the lease covers most maintenance costs.
No: Buying may mean that you incur higher maintenance costs over time.
Yes: Leasing allows you to upgrade every few years.
No: Buying makes more sense for long-term ownership.
Yes: Buying allows for any modifications you’d like to make to your car.
No: Leasing requires returning the car in its original condition.
Before deciding whether to buy or lease your next car, consider reaching out to a financial advisor or the lending team at Marine Credit Union. We can help you explore your options and find the best loan to meet your needs. Get in touch with a Marine Credit Union lender today.