Lease or Buy a New Car?

Lease Buy

We often wonder whether it's best to lease or buy a new car. According to LeaseGuide.com, it's not possible to simply say that one is always better than there other so they have provided a summary of Lease vs. Buy for your benefit:

The SHORT-TERM monthly cost of leasing is always significantly less than the cost of buying. For the same car, at the same price, over the same term, with the same down payment, monthly lease payments will always be 30%-60% lower than loan payments. This is still true when compared to 0% or low-interest loans offered by the car manufacturers.

The MEDIUM-TERM cost of leasing is about equal to the cost of buying, assuming the buyer sells or trades the vehicle at loan-end and the lessee returns the vehicle at lease-end. Comparisons sometimes show buying to cost a little less than leasing as a result of lower fees, lower finance costs, and the assumption that a purchased vehicle will return full market value if it is sold or traded at the end of the loan (often a bad assumption, especially if traded). However, when the benefits of wisely investing monthly lease savings are considered, along with tax savings, the net cost of leasing can be a bit less than buying.

The LONG-TERM cost of leasing is always more than the cost of buying, assuming the buyer keeps his vehicle after loan-end. If a buyer keeps his car after the loan has been paid off and drives it for many more years, the cost is spread over a longer term. It's easy to figure out that the cost of buying one car and driving it for ten years is less expensive than leasing or buying four or five different cars over the same period. Therefore, leasing is always more expensive than long-term buying. If long-term financial cost savings were the most important objective in acquiring a new car, it would always be best to buy the car and drive it for as long as it survives — or until the cost of maintenance and repairs begins to exceed the cost of replacing it. However, many automotive consumers have other more short-term objectives that are more important than long-term cost savings.

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