One of the bigger financial investments you’re likely to make in life is getting a car. For many, deciding to buy or lease a car requires a lot of planning and consideration. A vehicle is used for getting from point A to point B, but what other purposes will it serve? What level of commitment are you willing to make to a vehicle? Is a hefty car loan something you can afford in your long-term plan, or does a short-term solution make more sense for your situation?
Luckily, there are options to fit most price points and lifestyles, starting with the choice to lease or buy your next car.
What’s the Difference?
Just as renting an apartment is different from buying a house, the terms of ownership for leasing and buying a vehicle differ. Leasing a car does not mean you are leasing a car from the dealership, but rather from the finance company to which the dealer has “sold” the vehicle.
When you buy a car, however, you are financing it by taking out a loan from a bank or another lending institution, purchasing it from the dealership, and paying off your loan until the vehicle becomes an asset of your own. There are a variety of pros and cons for each option, such as higher monthly costs for buying, while leasing a vehicle requires that you keep it in good condition.
How Do I Decide Whether to Buy or Lease My Car?
In order to decide whether buying or leasing a car is better for you, it’s important to consider all the factors of your lifestyle. This might include your financial situation, transportation needs, living circumstances, and more. Maybe you plan to live in a certain area only for a year or two, in which case a short leasing term from a local dealer could be a logical solution. Perhaps your growing family is gearing up for years of family vacations and road trips, which would make investing in a reliable vehicle the appropriate choice.
There is no right answer, and evaluating the alternatives is up to personal discretion — but having all the facts is the best place to start. Check out the accompanying resource for more information on leasing vs. buying a car.
Infographic created by O'brien Toyota