Leasing or buying used: which to choose?

Buy used, or lease a new car? Both financing options have their upsides and downsides, and much depends both on what you need and what your exact financial situation is.

Leasing A Car
The big advantage of leasing a car is that you get a new car, albeit only temporarily, and all the reliability that guarantees.

In essence, leases are long-term car rentals. You sign a contract for a set range of time, generally three years, and have to abide by the requirements of the lease. As a rule, you have to keep the car in good repair and stick to a repair schedule, and you will also have to drive below a set number of miles.

Financially speaking, leasing will generally be a bit more expensive than buying a used car, and you will also have to make a decision at the end of the lease about whether to buy the car at market value, or return it to the dealership and look at getting a new lease. You also do not have a lot of wiggle room with financing; it is either accept the dealership’s terms or find another lease. That may not sound ideal, but there are two specific scenarios where leasing makes a lot of sense.

The first is simply that you do not want to buy a car. Leasing a car is incredibly popular among, for example, people who will only be living in an area for a few years for work, those who need a car but do not want the financial entanglements of a car loan, or perhaps those who need a sedan now, but might need an SUV in the near future.

The second is essentially protecting yourself against sudden, harsh devaluation. Automotive history is full of trendy cars that suddenly lose their secondary value. Remember the Hummer? If you are chasing a trend, leasing is a good way to try for a few years before you buy.

Just as important as the right car is buying it the right way.

Buying Used
Buying used cars needs no introduction, at least as a concept, but when comparing it against a lease, there are a few pros and cons to consider. The first pro is simple. It is usually cheaper to buy a used car over leasing a new one. Even buying a late-model used car is generally lighter on your wallet than leasing. And unlike a lease, you have ownership of your car. There are no mileage limits, no mandatory repair schedule,and no dealership to which to answer for the way you use your car.

Of course, the downside is, once you buy a used car, you own it, with all that implies. If there is a problem with a leased car just off the lot, the dealership will fix it; after all, legally speaking, it is their car. If you drive a used car off the lot and its muffler falls out as you pull away from the dealership, that is your problem. Legally speaking, there is just less dealer accountability for a used car. If you choose to buy instead of lease, you also need to spend more time on finding just the right financing for your budget, which can be tricky.

Which To Choose?
Choosing the right option for you really boils down to what most fits your lifestyle and what you are looking for in a car. If you are on a budget and just need four wheels, a trunk, and a motor, buying used is likely going to be a good choice. But if you want a new car without the financial commitment, leasing will get you on the road quickly and with minimum fuss. When you are ready to drive, sign up for our newsletter.