Should You Buy or Lease Your Next New Car?
CARS.COM — So, you’re considering leasing your next vehicle.
Sure, most auto shoppers either pay cash or finance their purchase with a loan, but you’re considering joining those intrepid consumers willing to forgo new car ownership in favor of the short-term benefits that leasing provides.
Related: How to Get a Good Lease Deal
Maybe you’re self-employed and can write off your lease payments as a business expense. Maybe you’re trying to get into a luxury model for a smaller down payment. Maybe you demand the latest safety and technology innovations and don’t want to be saddled with a 60-month loan term. Or maybe you just like driving a new car every few years.
For many leasing consumers, the lower monthly payments compared to a loan are the carrot. When interest rates are low, lease payments may be close to a loan payment for buying a vehicle outright. On the other hand, high interest rates make leasing more attractive. But even tossing out interest rates, the reliability and quality of new cars can make leasing appealing. It often comes down to the residual value, or the worth of a car at the end of the lease, experts say.
Lower payments and higher interest rates aren’t the only reasons to lease, because leasing also offers purchasing flexibility, experts say. Lessees don’t have to worry about owning a depreciating asset (as automakers know all too well) or dealing with costly car repairs. At the end of the lease agreement, assuming they’ve kept the vehicle in good condition aside from normal wear and tear (and stayed within prescribed mileage limits), they can simply turn in the car and walk away.
Of course, the benefits of car leasing have a price. While it’s fun to have a new car every few years, consumers who lease have nothing to show at lease-end; they have to either lease another vehicle, or bite the bullet and purchase a car. And then it’s the “loan versus lease” question all over again. But if you’re committed, at least be sure to start with our leasing glossary to familiarize yourself with the common terms necessary to negotiate the waters of how to get the most from your lease.
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