Is it better to lease or to buy a car?

"Should I lease or buy a car?" is a frequently asked question by many people.

Before making the big decision, you should know that both leasing and buying have advantages and disadvantages.

Think of it as buying versus renting a house. It depends on the individual circumstances more than anything else. You need to figure out which option is cheaper for you, and which one suits your lifestyle better. To help you decide, we've prepared a few things to think about before deciding to lease or buy your next car.

Things to consider when buying vs. leasing

Buying and leasing both have their benefits and drawbacks. If you tend to keep your car for a long time, buying is a better option for you obviously. If you only have a small down payment saved up, leasing may be a good option. Either way, let's have a closer look at the subject. Here are a few things to consider when buying versus leasing a car:

Monthly Cash Flow

In general, if you need access to more cash every month, leasing may be more favorable. If keeping your monthly car payments within a tight budget is a priority for you, leasing could be better. If your budget is good, it makes more sense to stick to buying rather than leasing. Keep in mind that breaking a lease can be extremely expensive. If you end your lease early due to whatever reason, you'll pay a penalty. Some drivers can save money by leasing their car instead of buying it, while for others it will be far cheaper to buy it with finance.

Credit

How is your credit doing? Get this: if you have a bad credit, both buying and leasing will hurt, but it will hurt more on the lease side. So buying a car in this case is the better option. People with bad credit can find a way to finance a car purchase, but having a bad credit won't allow you to lease a car effectively. Most dealers only lease to consumers with good credit anyway.

How much you drive

To put it simply, if you drive a lot, buying a car is surely a better option than leasing. The typical car lease gives you an annual limit for miles driven. So if you drive past that, you'll have to pay a penalty. If you frequently take long-distance road trips or just drive a lot on regular basis, just stick to buying.

Keeping the car

Another thing to consider is for how long do you plan on keeping the car? If you only want this car for a few years, leasing is a better option. If you enjoy getting the newest high-tech features all the time, leasing allows you to get a new car every few years. On the other hand, if you plan on keeping the car for many years to come, buying is what you're looking for.

Maintenance

This point is probably more important than you think. First of all, how hard are you on the car? Do you get a lot of scratches on your car? Do you have a high risk of damage to the car? If yes in the answer, then don't go with leasing, because of the wear-and-tear fees. Car maintenance is very important for any car owner, regardless of buying or leasing. But as a car owner, you wouldn't have to worry about scratches and general damage compared to when you're leasing. In other words, a car lease may not be the best choice for a family with kids or pets because of the increased risk of damage to the car, which could lead to a penalty at the end of the lease.

Conclusion

In the end, your decision will come down to your budget, your needs, and your lifestyle. While many experts say that buying would be financially better in the long run, leasing could be better for some people. If you buy a car then you have a car. You can continue to drive it or sell it, whereas at the end of a lease you have nothing. But as car prices continue to climb, so does the number of people who lease. Do your sums with care, study both options carefully, and then decide accordingly.