How do you decide whether to buy or lease a vehicle?

Question

What are the factors involved and how do they affect the decision?

Answer 1

Leasing a vehicle you MUST fully understand the contract, whatever term you sign be 100% sure you will want to keep it for that term
If you went to jail for 3 or 4 years you most likely would be released early with good behavior, with a lease, there is no parole without hurting your pocketbook big time.

you have a very valid question and to supply a proper answer in detail the benefits VS the pitfalls I would be on here typing with my 2 fingers for over an hour with my final answer being BUY dont LEASE.

I know from looking at some of your previous questions your considering a Honda Pilot, if I may suggest go to my website http://www.usedcartips.org/index.html and click on the edmonds.com banner and get some quotes on finance and lease, you will be well prepared when its time to commit

Answer 2

Why lease a vehicle? Although a lease is different than a contract, it serves the same purpose; you drive a vehicle and repay some entity while you are doing it. With a contract however, regardless of term, when you make that last payment, the vehicle is yours. Not so with a lease, there is a balance remaining on the lease, a residual, and it is due and payable at a specific, preset, time.
With a lease you are only paying for that portion of the vehicle you use, using a predetermined amount to establish a residual. The true value of a lease is either a lower payment on a like vehicle or more vehicle for the money. Because of the residual, the payment will be considerably less than a contract of sale payment in which all payments combined pay the balance due in full.
Leasing is neither good or bad, what is important is whether or not it works for you. Typically, about 20% of new vehicles are leased, and most of that 20% go to small business owners and professionals who replace their vehicles every three years, take the write off, and appreciate the fixed accounting method to do that. One downside of leasing is the residual value. At any given time in the lease the vehicle will have zero equity, and in many situations the vehicle will be worth less than the balance owed, creating a potentially costly situation when attempting to dispose of the vehicle prior to lease end.
Considering that most salespeople are not well versed in the workings of a lease, and that most consumers know right at zero about leasing, and considering the early bad reputation of leasing, it is apparent to me why leasing is not the prevalent way of "owning" a vehicle. And perhaps of greatest impact is that we want to OWN it, not rent it or lease it, OWN it. However, the majority of all vehicles traded to a new vehicle dealership for another vehicle are NOT PAID FOR, which could be a good argument to lease instead of buying.
Having built several successful dealership lease companies, and being a student and teacher of leasing, I am a proponent of individual consumer leasing. It makes sense to pay only for the amount of the vehicle being used, and to know the certainty of when the vehicle will be replaced. For some however, the flexibility of a contract purchase which allows the owner to trade at will without a contractual penalty is generally the overriding factor, along with the others, in whether to lease or purchase.
The factory incentives are like the factory rebates and the finance rates, some are exceptional, and some are average. Leasing in itself is a simple process with set guidelines and finance equation figures. Each component of the finance equations are linked together, changing one will change everything else.
The benefits to leasing over buying are;
1. Less initial money out of pocket
2. A lower payment
3. More vehicle and generally more options
4. An opportunity to trade sooner (compared to a five year contract)
5. GAP insurance
6. Paying only for the portion of the vehicle you use, the rest is held as a residual
Remember to do your homework upfront, even factory lease deals are negotiable at the dealer level. And factory lease deals may be better with an independent lease company. Check the manufacturer’s website for their lease deals, get an invoice amount from a site like Edmund’s, and read general information on leasing.
Besttoyou, Chuck
30 years/thousands of deals
www.thebestdealofyourlife.com

Answer 3

Leasing is expensive, but relieves you the risks of ownership. Leasing has mileage limitations and no one seems to see this at the onset.

Buying a car, especially a new car has risk because the car depreciates quickly.

You best bet is a used car, one which you've paid cash. New cars are for millionaires, or pretenders that THINK they are millionaires.

Answer 4

It's better to buy, because you end up paying the same amount when leasing it but you won't own the car.

Answer 5

lease if for business. Buy if for personal use and vacation travel.
Try to pay cash for the car as it is the worst item on depreciation.

Answer 6

Its like buying or renting a house. Rent money is not going toward anything in the future. Buying a house is going to be yours the whole time your in it and if you sell it you get your money back. But like cars you will have to pay for maintenance of anything it will need. Why not buy a pre-owned car and get a warranty with it?