Ideal conditions for leasing
1. You want low monthly payments: Buying a car generally gives you higher monthly payments than leasing. If you want a very nice car for low payments, leasing is always the way to go.
2. You need low up front costs: Part of what makes buying a car so expensive in the short term is that you have to throw a lot into the down payment. Down payments can be thousands of dollars. Not everyone has this kind of money to spend short-term.
3. You like to drive a variety of cars: Even people on a budget like to drive different kinds of cars over the years. Since most people can’t buy a new car every few years, leasing becomes a great option for them. It gives you a short-term commitment to a great car and at the end of the lease, you can lease another vehicle.
4. You drive less than 15,000 miles a year: If you’re not a big driver, leasing is a good option. If you drive more than 15,000 miles a year, you’re going to incur fees for every mile over this, meaning that leasing isn’t on the table.
5. You want to avoid costly repair bills: When a car you’ve bought breaks down, it may or may not be under warranty. Used cars often aren’t covered by warranty. Leased cars, however, are covered by warranty and therefore you are going to save a ton of money on repair bills if you lease a car. Repair costs are some of the biggest factors in how much you pay during your time with a car. It’s a good feeling to know that those are covered under the lease.
But what about buying a car?
Buying isn’t always the lesser option. There are definitely times when buying is going to pay off and in the long run, it can be a cheaper option, even if it means the car you are driving isn’t as good a the one you could lease. Here are a few circumstances where buying makes sense.
1. You drive tons: If you drive a lot, you’re probably going to want to buy. The set miles stipulation of leasing makes it imperative to limit your driving in order to save money. If you want to drive as much as your heart desires, buying makes sense.
2. Your credit is questionable: You need better credit to lease than to buy, so if you know you’re on the edge with credit, looking at buying is a good idea.
3. You want to gain equity in the car: You won’t gain equity in a leased car and you can never sell it to recoup some of your investment. When you buy, you’ll gain equity and be able to sell at the end of the financing arrangement.
Lease or buy?
With few exceptions, leasing is a wonderful opportunity to drive a much nicer car for lower monthly payments. It doesn’t leave you stuck with one certain car for a long period of time, long after you’ve lost interest in it. There will always be people who drive a lot, or who have shabby credit, who won’t be able to lease a car because of those things. For those who are able to lease, though, it’s a wonderful opportunity to drive a great car daily without draining their monthly budget.