Leasing vs. Buying A New Car: What's Better For You? | Negotiate Best Deal

Ready to get your hands on a new car but not sure whether to buy orlease it? Deciding if should you lease or buy a car is a huge financialdecision that could have a major impact on your lifestyle for years to come. Inour books, that's not something you want to take lightly.

So, which option is right for you? In this article, we're breaking downthe differences between leasing vs buying a car to help you make the rightdecision.

Table of contents

What exactly is car leasing?

Leasing vs buying a car: what's the difference?

1. Ownership

2. Monthly payments

3. Upfront costs

4. Mileage limits

5. Maintenance and repairs

6. Customization

7. Long-term costs

8. Resale value

What car buying options do I have?

When does each option make the most sense?

Frequently asked questions about car leasing vs buying

In conclusion

What exactly is car leasing?

Car leasing is in many ways similar to renting a car over a long period.So instead of buying the car outright, you only pay for the depreciation over aspecified period of time, usually for 24 to 48 months.

At the end of the car's leading period, you can either return the carand lease a new one, buy it at the predetermined price or simply walk away andexplore other options.

Leasing vs buying a car: what's the difference?

While both leasing and buying allow you to drive a car, their financialstructures, ownership status and degree of flexibility are on opposite ends ofthe spectrum. Here are the key differences between leasing vs buying a car.

1. Ownership

You don't own the car when you lease it and you have to return it afteryour leasing term has elapsed. Buying on the other hand means you get to ownthe car once it's paid off.

2. Monthly payments

When leasing, you only pay for depreciation, making your monthlypayments lower. Buying a car on the other hand comes with higher payments asyou're paying the full cost of the car.

3. Upfront costs

Leasing comes with significantly lower upfront costs and in most cases,you only need to cover the first month's payment. In contrast, you need to putin your down payment, pay for taxes and cover other fees when buying, makingupfront costs higher.

4. Mileage limits

Leased cars typically come with a limit that typically falls between 10,000 to 15,000miles per year and you have to pay extra fees for exceeding it. When you buy acar, on the other hand, there are no restrictions.

5. Maintenance and repairs

For car leasing, these costs are covered in your warranty, althoughexcessive wear and tear may result in extra fees. When you buy a car, you'reresponsible for these costs after your warranty expires.

6. Customization

Modifications on leased cars a very limited with the potential of voidingthe lease agreement altogether. When you buy, on the other hand, you have thefreedom to customize your car however you want.

7. Long-term costs

Leased cars are more expensive to own over time as you will always havea monthly payment. This makes buying costs lower long-term as you own the caronce it's paid off.

8. Resale value

When it comes to leasing vs buying a car, leased cars have no resalevalue as you don’t own the car. However, you can sell or trade in a carwhenever you want to when you buy it.

What car-buying options do I have?

If you decide to go the buying route, you have two primary options, paying for the car in full orfinancing it. If youhave the funds, buying a car with cash means you get immediate ownership withno debt, eliminate the interest payments on loans and if you're a goodnegotiator (or make the smart choice of working with a car buying service),you can shave off the total cost of the car with a cash discount.

Financing a car on the other hand is great for those who want to own acar long-term while spreading their cost of ownership over time. However,interest rates mean you end up paying more than your car is worth, but thatdoesn’t mean you can't negotiate the price too.

When does each option make the most sense?

So, should you lease or buy a car? Leasing vs buying a car all comesdown to what makes the most sense for you in terms of finances and yourlifestyle. Leasing a car would make the most sense for you if you:

• Driveunder 15,000 miles per year.
• Want lowermonthly payments.
• Lovedriving a new car every few years.
• Want toavoid long-term maintenance costs.

Buying a car on the other hand would make themost sense for you if you:

• Plan tokeep your car for many years.
• Drive alot and don’t want mileage limits.
• Want toown the car outright and eliminate car payments.
•  Are okaywith paying more upfront for long-term savings.

Frequently asked questions about leasing vsbuying a car[pm1] 

Is leasing a car better than buying one?

When it comes to leasing vs buying a car, leasing has lower monthlypayments, but in the long run, buying is more cost-effective since youeventually own the car. In both cases, you would want to work with a free car-buyingservice to negotiate the best price for you and save thousands.  

Can I buy my leased car at the end of the term?

Yes, buying a lease car out is possible as most dealers have that option.

What happens if I go over my lease mileage limit?

You’ll have to pay an excess mileage fee, and it is usually calculatedper mile over the limit.

Can I negotiate the terms of a lease?

Yes, lease terms, including mileage limits and down payments, can benegotiated. To maximize your cost savings, we recommend working with an auto broker.

Do I need to have good credit to lease or buy a car?

Good credit can undoubtedly help you secure a better lease or buyingterms. However, some dealers do offer options for those with lower creditscores, but you would have to pay higher interest rates.  

In conclusion

Choosing between leasing vs buying a car all boils down to yourfinancial standing, driving habits and long-term goals. One offers lowerpayments, reduced maintenance costs and the chance to drive a new car every fewyears while the other gives you ownership, the freedom to customize your car andcost savings long term.

With these insights in mind, you're well on your way to making thesmartest financial decision. Need help securing the best car buying or leasingprice? Our car brokerscan help at no cost to you.