Many people are faced with the decision of whether to buy a car or lease it for a few years. Both options have its benefits and drawbacks.
Buying a car can either mean purchasing new or used, and if purchasing new, it may require taking out a car loan. Having a good credit score is crucial, so if yours is less-than-perfect, you may want to consider waiting until you can raise your score or searching for a used car with a similar payment.
With purchasing a used car, you never know if it’s going to require more maintenance than expected, which can be costly and time-consuming. However, Hondas and Toyotas are just a couple of the most reliable and fuel-efficient cars on the market, in which case buying used can save you a lot of money in the long-run.
Leasing a car can get expensive if you go over the mileage limit and have to pay per mile before the lease is up, which can add up quickly. Additionally, U.S. News says that “at the end of the lease, you will have no equity in the car, and no value to apply as a down payment on your next car. If you like the car and want to buy it, you’ll have to take out a loan, and that loan will incur a higher interest rate, since you will be financing a used car.” Furthermore, leasing a car also requires having a good credit score. Another drawback is that at the end of your lease, you will have zero equity in the car, which means no value to use as a down payment on your next car. If you decide to keep the car, the loan you take out will incur a higher interest rate, because you will have to finance a used car.
Leasing can be ideal for buyers who desire a nicer, more expensive car they otherwise wouldn’t be able to afford. Also, buyers have the benefit of knowing they can lease a new car every few years and be up to date with the latest technology and safety features. With leasing, there’s also no hassle of selling the car or getting a good trade-in price, you simply just return the car back to the dealership.
Ultimately, your lifestyle, credit history, mileage, and convenience are all important factors that can determine whether buying or leasing is the best choice for you.