Should You Lease, or Should You Buy?
In terms of a relationship, do you prefer a fling? Or is a long term relationship more your style?
A car lease is like a fling. It lasts about 2-3 years. You can then choose to either break up (end the lease) or get married to your trusted car (a buyout). Sounds safe enough but there can be problems with this type of affair.
On the other hand, if you choose to buy instead of lease, you are in for a commitment for five or more years, for better or for worse, in sickness or in health. You had better be sure about that relationship. You will need to lovingly maintain your car so that it will remain reliable, trustworthy and faithful till the end. Or so you hope.
Which is a better match for you?
Let’s talk about the advantages and disadvantages of both:
A lease is indeed like a fling. No attachments. It’s not really your car after all. It’s just a glorified rental. As such you don’t need to worry about repairs as all that will be under a factory warranty. You don’t really need to look after it much. At least that’s the way it seems.
If your monthly cash flow is an issue, then leasing is a better idea.
The monthly lease payment is lower partly because the lease rate is often lower when compared to a standard car loan associated with a purchase. The lease payment is also lower because instead of paying taxes on the full amount of the car, as you do in a purchase, you only pay the taxes on the depreciated portion of the car. Your savings could be substantial in higher tax areas of the country. A lease is also a sizable tax right-off (for all you fellow entrepreneurs). Could be good for the bottom line.
But like a fling you had better be very careful with a lease. It can be dangerous. If you were to go over the allotted mileage (usually 30-36k miles over 3 years years) there will be hell to pay. You will be penalized to the tune of .25-30 cents per mile. Ouch. It is not worth the risk if there is a chance that you will exceed the agreed upon miles. You can avoid all this by buying the car out at the end of the lease, but then why did you not buy the car to begin with?
In a lease you must heed these three words: Know Your Commute!
You better know how many miles you will pile on in the lease term, otherwise you will break the bank. No exceptions given. If you do not have guaranteed job security then you should not even consider a lease. Ditto if you have any chance of moving closer or further away from your work.
Just like a rental car, the lease company will want their car back in pretty much the shape you received it . Like new! Unless you paid for extra wear and tear (and if you have kids you better buy that protection!) they will charge you for the normal stuff that happens, like dings, scratches, stains and tears. You see, they want their car back so that they can sell it at a profit and you are the one that makes that profit possible for them. They never lose.
You need to be more careful with a lease, perhaps even paranoid...
...because the stakes are too high. If you damage the car you will be charged big time when you return it.
You won’t have those worries with a purchased car. It’s all yours. You have agreed to accept each other’s faults. If you forget to change the oil on time or hit a few curbs, all is forgiven and the relationship is still intact. Having a car with a few dings is just like a relationship that has its flaws. In the big picture you accept all that comes with the marriage.
It’s really a lot easier to own your car rather than lease.
So, I say make that vow and commit to purchasing your car. Own it. In the long run it is the better value. But if you have bonding issues then you might consider a lease, throw caution to the wind and risk a nasty breakup.
The choice is yours.
Greg Macke- Your Car Angel
Greg Macke is a car blogger and author of “My 7 Secrets to Buying a High Quality Used Car”. He is a professional car buyer and consumer advocate working closely in the industry to improve the buyer’s experience. His high quality car buying tutorials offer help to the car buying public. – See more at: https://carbuyingsupport.com
I’m in the position now to either lease again or buy this one. I have 16000 miles on my Highlander 2016: I would owe less then it’s worth. My only issue with this is I live in an area that could and does require all wheel and this one is like the base model. Buying new isn’t an option right now because of payments. I’m not excited to buy used, I don’t know the use of or condition of the used. So I’m not sure at this point what is my best option. We have always been a Toyota family so I know this one would last a long time. I would appreciate your opinion. I only have till October to make this decision. Hope you can help.