By Chelsea Bancroft, Picture by Shelly Borga, Dakota & Co., Sponsored Content by Mazda
There are several options when it comes to getting a new vehicle—buying new, buying used, leasing—and it can be hard to know what’s best for you. Leasing often gets a bad rap as “just throwing money down the drain,” but when you consider that the moment you drive a vehicle off the lot, it depreciates by 10 percent, one could argue you’re doing the same when you buy new. There are pros and cons to both buying and leasing, so how do you know which is the best option for you? Start by asking yourself the following questions:
Do you put a lot of miles on a vehicle?
Most leases limit the yearly mileage to between 12,000 and 15,000 miles. Are you unsure how many miles you drive a year? Keep track of how many miles you put on your vehicle during an average week then multiply that by 52. If it’s more than 12,000 miles, buying is a better option for you. Is your total mileage only a little more than that? Many lease agreements let you buy extra miles up front, or you can pay per mile above the limit, which is typically about 15 cents per mile. Do you drive for Uber or Lyft? If so, leasing is definitely not a good option for you, and ride-share driving actually forbidden by many lease contracts.
Do you want low monthly payments?
When you lease a vehicle, you’re only paying for the difference between the car’s current price and its expected future value (how much it’s anticipated to depreciate). Because of that, lease payments are typically lower than monthly loan payments, especially for more expensive vehicles. Leasing often allows you to drive a more expensive car since the monthly payments are lower than if you were to buy it.
Do you have a lot of cash upfront?
Typically, when buying a vehicle, you are required to put a large amount of money down. If you have enough cash to pay for a car outright, buying is the way to go. You won’t have to worry about monthly payments and will save thousands in interest. Are you a little strapped for cash? Leasing typically requires much less cash upfront, usually only the first month’s payment, a refundable security deposit and a couple of other fees.
Do you like to drive your vehicle for as long as possible?
If you’re someone who likes to drive the same vehicle until it no longer runs, buying is the best option. A benefit of this strategy is that after you have paid off your loan, you don’t have to worry about monthly payments.
Do you like driving new vehicles with the latest technology?
Leasing is a great option if you like driving a new car. A big benefit of getting a new car every two to four years is that you always have access to the latest technology. Not only does that mean you’ll have more entertainment features like Apple CarPlay and Bluetooth, but it also means having the latest safety features, like a back-up camera, lane-departure warning and Smart City Braking.
Do you have kids and/or pets?
Most lease agreements have an “excessive wear and tear” clause, meaning when you turn your vehicle in at the end of the lease and it has the inevitable wear and tear that come with driving with kids and pets, you may be responsible for paying an extra fee to cover the cost of cleaning or making repairs. Before leasing, talk to the dealer about what qualifies as excessive wear and tear and what the resulting fees are.
Do you like to customize your ride?
Are you someone who likes to customize your vehicle with special wheel rims or paint jobs? If so, leasing is a no-go. When you lease a vehicle, you have to turn it back in just as you received it, so no customization is allowed. That means no new paint jobs, lift kits, sound systems, etc.
Do you anticipate any major life changes in the future?
If you think your financial situation might change, keep in mind that with a lease, you are locked into that payment for the length of the lease (typically three years) and the cost to terminate the lease early can be significant. If you buy a vehicle, you have the option to sell it or trade it in for something more budget-friendly. A major life change isn’t exclusive to finances. If you’re leasing a small sedan when you become pregnant, it might be difficult to manage once Baby arrives. Are you making a big move? Driving cross-country will put extra miles on your vehicle, which can cost you in the end.
Do you like having maintenance covered by warranty?
Of course, everyone likes to have maintenance issues covered by a warranty. Something to keep in mind when debating between leasing and buying is that a leased vehicle is new and you only keep it for three years, so you’ll be covered by the manufacturer’s warranty for the length of the lease.
Is your credit score not the best?
If this is the case, buying is going to be your only option. Unfortunately, leasing requires really good credit and a stable financial situation.
So, what’s best for you? It comes down to your personal preferences, lifestyle and financial situation. Calculating the difference between buying and leasing can be tough, but online calculators are available to help. Are you still unsure? Shoot me an email and I’d be happy to help walk you through it. I don’t physically sell cars at Roger Beasley, meaning I don’t get any commission, so you won’t get any pressure from me either way.