Should I Lease or Purchase a Car?

Leasing has become a very popular method of acquiring a new auto. Although the payments may seem attractive, it may not always be the best financial decision versus purchasing the vehicle outright and financing it with a low-interest loan. Use the following calculator to help analyze the financial impact of lease versus buy.

The Financial Impact of Leasing vs. Buying a Car

If you need a new vehicle, you have two basic options: leasing and buying. Deciding which choice is right for you means considering your needs and calculating the total costs and financial impact of leasing versus buying a car.



What Does Leasing a Car Mean?

Leasing a car means you effectively pay a monthly rate for the use of the car. You return the car at the end of the lease period without owing additional charges unless the car is damaged. After leasing, you also have the option of purchasing the vehicle outright for its stated value at that time. Leasing offers a few advantages:

  • It allows you to upgrade often if you always like to own a newer vehicle.
  • It gives you the use of a car at a lower monthly cost when compared with buying outright.
  • You do not have to worry about re-selling in a few years.

What Does Buying a Car Mean?

Buying a car, either with your own money or with financing, means the ownership of the vehicle belongs to you. There are several advantages to this:

  • You can resell the car after a few years and get money to buy a new one.
  • You don’t have to worry about small scratches or imperfections caused by regular use — which can mean a big bill at the end of a lease term.
  • You can keep your car as long as you like.
  • You can make any changes to the car you wish.

Which Is Right for Me?

The right fit depends on your needs. If you require a relatively new car with a warranty and roadside assistance for just a few years, leasing may make sense. If you want a car permanently, buying may be a better choice for you.

The best way to decide is to use a lease vs. buy car calculator to take a look at the total costs of ownership. Keep in mind you will need to make monthly payments with either a car loan or a lease. Consider how long you will have the car, your rebate, the money you put down and other factors. Which will end up costing you more in the long run?

Purchasing is not always better with a car because unlike a house, a car depreciates in value. It is worth less the longer you own it, while a house will grow in value. Money Help Center has created a calculator for car buyers to help you decide which option would make the most sense for you.

Whether purchasing new or leasing a car, you could be taking on a financial burden. Additional costs associated with cars include gas, state inspections, automobile insurance, and repairs that may fall outside of a warranty period. Be sure to weigh the benefits of buying a used car as part of the evaluation process for which option is best for you financially.

This Money Help Center calculator, like all our calculators, are free of bias and cost nothing to use. Try out a few different options to figure out whether your next vehicle should be a lease or a purchase.