Lease or Buy a Car?
Is it best to lease or buy a car? Leasing versus buying - what is the difference?
The LeaseGuide.com web site is primarily about car leasing because leasing is less well understood than buying with cash or with a loan. But even people who are experienced buyers and who understand leasing are often confronted with the decision as to how they will finance their next car -- to buy or to lease.
The "lease vs buy" decision for many people will be made based a simple matter of an affordable monthly payment. Leasing always offers monthly payments that are 30% to 60% less than a loan payment for the same car. In any given month car manufacturers have special lease deals on top-quality makes and models for as low as $149/month (see Best Car Deals for specifics). It would not be possible to have a car loan payment that low without a huge down payment or high-value trade-in.
Use our Lease vs Buy Calculator to compare actual car leasing and buying costs. Use it to help you make your decision.
Another reason for choosing leasing when confronted with the "lease vs buy" question would be savings on sales tax. In most states, sales tax is charged only on each monthly lease payment. When buying, sales tax is charged on the entire value of vehicle.
For other people, the decision to lease or buy will depend on long-term cost - what is the lowest cost way to finance a car over the long haul? The answer is simple -- leasing is more expensive in the long run if you compare it to buying a car and driving it for many years. Even if you lease and buy your leased car at lease-end, it's more expensive than buying outright.
For some people, the "lease vs buy" decision will be made for them by circumstances beyond their immediate control. For example, leasing requires a better credit score than buying with a loan. If you have a poor credit score, you may not qualify to lease (find out your most recent credit score with a quick signup at FreeCreditScore.com. If you don't know that you have a low credit score you could be left with only the option to buy with a loan, at a high interest rate..
If you have less-than-perfect credit, see Auto Credit Express for auto loans, especially for those with credit problems, bankruptcies, or repossessions. They can get you a loan at the lowest possible interest rate allowed by your credit score.
Summary
Car leasing is not for everyone. The "lease vs buy" question is one that has a different answer for each individual car buyer. If monthly payment is the most important factor, leasing may be the answer. If long-term cost is more important, buying may be better. If credit is an issue, leasing may not be feasible.
For more details on making a lease-vs-buy decision, see Lease vs Buy Explained.
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