Buying vs. Leasing?

Question

What are the advantages and disadvantages of both options? Both my boyfriend and I are looking at buying new vehilces in about 2 or 3 months and have been hearing many great things about leasing. Just trying to weigh the pros and cons.

Answer 1

The car will end up costing about the same in the end. But here's how they work.
When you lease a car. You do not have sole ownership of it. Most leases are for a 36 or 48 month term, the reason for this is the car is at it's best resale value at that time. When you buy a car on a lease there are restrictions, you can only put a specific number of miles on the vehicle, if you go over that limit you are charged for each mile over. you must service the vehicle as per the schedule and it must be done at an approved dealership/garage.
When you lease a car you can put little or no money down and they can make your payments to suit you. say for instance you were buying a $20,000 car. with no money down a 48 month term they could give you payments of $250.00 per month. and on a lease the tax is applied each month not up front. Because your payments don't add up to the price of the car after 48 months. They apply what they call a buyout amount. At this point you still don't own the car. your options are to pay the buyout price and the car is yours. or just walk away and leave it. or trade it in on another vehicle.
leasing a car is usually easier to qualify for, it costs very little up front and the monthly payments are lower. You should be careful however that your buyout at the end is not more than the cars value. because if you trade it in and the car is worth say 10,000 and your buyout is 12,000 the extra 2,000 will be added to the new car you are buying.

Answer 2

If you buy a car, you and the bank own it until the payments are made, then the ownership reverts to you. You have a paid off car at the end of the contract and there are several advantages to purchasing over leasing. One is that with good credit you can get into a new car for little or no down payment. Another is that there is no mileage limitation. You can drive the wheels off of it.
Leasing on the other hand can offer a lower monthly payment since all you are financing is the depreciated value of the car for the term of the lease. The car goes back to the lessor at the end of the contract. You walk away with nothing and sometimes have to pay additional charges for mileage and damages. There are sound reasons for each and your individual situation would dictate which was best for you. Generally if you just use a car for transportation on a limited basis and do not need to build any equity in it then leasing may be wise. However if you want to personalize the vehicle, or drive it a lot then purchase is the choice.

Answer 3

I leased and would never do it again. You will see a deal like $199 a month but what you will find is that there is a mileage limitation to get that rate -- maybe < 10,000 miles per year.
The reality is about $400 per month and up to lease a vehicle. Then at the end of the lease you have to pay a few hundred dolloars to turn the car back in and plus pay for any extra miles driven which could be a couple thousand dollars. In the end you have nothing. So if you buy the car you are leasing then you get hit with the tax you have to pay the State when you transfer title, more than a thousand dollars. If you buy the car instead of leasing then you have value that you own, that you can later sell, and the tax and license initailly can be built into your auto financing. NO one can tell you how many miles to drive or how long you can keep the car. And your car payments toward ownership will be about the same as a lease payment.

Answer 4

So many people are throwing there opinions on here and are very dumb. Why even answer if you don't do research so you can know what you are talking about. I am an auto leasing agent.
We offer mileage on an annual basis of 10K, 12K, 15K, 18K, 20K, 25K, and unlimited mileage. We have options to fit your driving style. You are charged a fee of .15 to .18 cents per mile over your allotted mileage. We offer terms ranging from 36 - 63 months. When leasing you can get a better car for a lower monthly payment.
Car is generally under warranty, unless high mileage or long term lease goes out of manufacturer warranty period. You can get into the lease for at least the 1st payment due at delivery or whatever you want to put down.
Many argue that you never own your car if you lease. How many people actually keep the car when it is paid off even with a conventional finance. Not many. They trade it in and have to listen to a car dealer telling them the car is worth 3-4 thousand less than it is. Why worry about what your car is worth when the term is up. Let the bank who underwrites the lease take a loss. Just call your Lease agent up and get into a new car of your choice.
A good agent will look over the car and tell you if a bank will hit you for an excessive wear and tear charge. We know what the bank looks for. A few scratches, small dents, worn tires, worn interior, etc. are all expected. They know the car will not be perfect, they just want you to take care of it. We will offer services to help you fix any problem if we believe the bank will say is excessive.
Please do your research. If leasing is for you, go for it. Many professionals are leasing now. Doctors, Lawyers, CEO's, Accountants, CFO's, are all leasing. They make up our primary customer. Many of us regular people are doing it as well. It's a great way to have a nice car for a cheaper monthly payment. Good luck whichever way you may go.

Answer 5

If you lease, you will be losing money in the long run because you are paying a monthly bill for something that will never be yours. By the time you pay for say a two year lease, you could have paid that money to have actually bought you a vehicle that is all yours. Whoever has told you to lease ANYTHING is completely nuts and is probably head over heels in debt. Don't listen to them. You don't need to start off your life so far in debt that you won't ever get out. I suggest listening to Dave Ramsey. He has a radio show and has written books. He did the same things & went flat broke and had to build everthing back up. Leasing my sound good but it has those little "catches" that most people either don't know about or don't want to tell you about.

Answer 6

Leasing is the single worst 'investment' in the country except for maybe a time share condo. You pour money into the lease, you have to keep the mileage at or below the contract listed amount (or they slam you for hundreds and hundreds of dollars) and you have to make sure every stain, smudge and blemish is repaired prior to returning it at end of lease or you will get double-slammed for 'condition'. After all this you then get the honor of walking home after you turn the car back in after the lease is up. There isn't a single positive aspect to lease vs buying.

Answer 7

Advantages of Leasing--
Lower payments.
Still have to have good credit.

Disadvantages
1.Same as renting, no equity.

2.Have to watch mileage. Usually allowed 12K per year anything over will cost you on average 10 cents per mile.

3.Value of vehicle at end of lease is OVER Stated. If you want to buy at end of lease then you have to haggle and refinance.

4.If you decide to turn in at end of lease vehicle any dings scratches or whatever have to be repaired. Can cost 1000's of $$ to just turn in vehicle.

5.Can trade in but balance of PAY-OFF is counted against new vehicle. So balance owed is counted as if you were buying it anyway.

6.Interest can only be deducted if used for business ONLY.

7.Required to maintain a higher level of Insurance.

Answer 8

Leasing: you are basically renting the car, with the option to buy at the end of the lease.

buying: its yours!

ALSO LEASING IS LIKE ANOTHER WAY OF GETTING A NEW CAR LIKE EVERY 2 TO 3 YRS. BUT IT WILL NEVER BE YOURS

Answer 9

I always buy brand new.. The couple times I bought used I had major non-stop problems you never know with used cars and generally dont get a warranty so buy new. Hybrids are actually cheap now and they offer tax incentives when you buy them. Look into the Toyota hybrids, they are resonable stay away from Honda hybrids theyre still over priced.

Answer 10

Leasing vs Buying is based on what you expect from your vehicle.

Do you plan to keep it for years and years? Then buy.

Do you normally tire of a vehicle in a couple of years. Then lease.

Can you deduct your vehicle expenses for work? Then lease.

Your payments when buying a car will never be lower than lease payments for the same term. For example:

I work for a Ford Dealership....so I will use a Ford Fusion as an example.

To lease a 2007 Ford Fusion V6 SE with an MSRP of $21,875 for 24 months, with 12,000 miles per year, and no money down out of your pocket (other than 1st months payment) your monthly payments would be: $418

To BUY a 2007 Ford Fusion V6 SE (exactly the same car) with a term of 24 months (even at 2.9%--which is the current promotional rate for this car for a person with very good credit) again, with no money down, and no trade...no cash out of your pocket at signing at all......is: $953.42

And someone suggested that you get socked for extra mileage at the end of the lease. Thats true...in the fact that you pay a certain amount for every mile over the agreed limit. In our case its .25 per mile. So, say that you go over by 1,000 miles . Thats a 250 "penalty". Not much, comparing the $953 monthly payment of buying to the $418 payment for leasing.
To BUY that same car, but finance it for 72 months, you can get your payments around $377. Indeed its less than leasing...but you have to be in this car for 6 YEARS.....

So, it depends on what you want from your car purchase to determine if you are a good leasing candidate or not. A properly trained sales consultant will try to "qualify" you....meaning determine what vehicle would be best for your lifestyle, and wether or not leasing is for you. We do this by asking a bunch of questions to try to help you choose the proper vehicle.

So, is leasing good? Yes. (If you will only put on the miles per year that you agreed to, take decent care of your car, like to always have the protection of the bumper to bumper warranty, want to get a new vehicle every couple of years, can deduct vehicle expenses from your taxes, etc.)

Is buying good? Yes. (If you intend to hold on to your car for the full term of your loan, if you drive excessive miles every year, if you often destroy your vehicles...due to work or whatever)

I have an additional thought in regards to the mileage and what is considered allowable damage. Visit this link at the Ford Credit website:

http://www.fordcredit.com/redcarpetlease/rcl_lep_wear_use.jhtml

It details what is allowed at the lease end. Its pretty amazing to think that all of this stuff is still considered "wear and tear"... For example on the exterior of a Ford lease vehicle the following information is direct from the website:

The following exterior wear and use is acceptable:

Minor dents, scratches, or cracks to the molding, trim, or lenses
Minimum amount of scratches, gouges, and rust to truck beds
Paint, road tar and atmospheric damage conditions which are removable
Minor dings and dents to exterior body panels

Sounds pretty amazing, really... that all that is OK at the end of the lease ... but it IS. Read more at that website. You'll rethink leasing.