Leasing vs Buying
When buying a new car, which is ultimately better, buying or leasing? Various factors go into choosing one over the other as each customer’s needs and wants are not always the same. One of the easiest ways to think about the differences between buying and leasing is: when you buy a car, it’s yours. You own it, which means it can be considered an asset, especially when it comes time to trade or sell your vehicle. Leasing is essentially renting a vehicle for a certain period of time with a limited amount of mileage the vehicle can be driven per year. At the end of the lease, you can either turn it back into the dealership, or you can buy it outright as a used car.
Buying a car typically will give you higher monthly payments, however, this will depend on your finance rate, the overall price of the vehicle, and how much money you put down as a down payment. You will also own your vehicle and be able to get out of it at any time.
When you lease you will have a lower monthly payment, but you may have a higher down payment, and it’s more difficult to get out of a lease. There are ways to swap a lease for another, but we would advise you to discuss that option with our finance department if that ever needs to happen.
Pros To Leasing
- Leasing is great for people who don’t necessarily drive a lot per year, as the usual lease will allow about 10,000-15,000 miles per year. Although you can adjust that before you finish your deal, you can also add more miles per year to your lease at any time.
- Most leases and the best leasing specials are typically for 36 months, which is 3 years.
- You prefer not to make long-term commitments and instead like the idea of driving a car for 2-3 years and then turning it back in for something different or newer.
- Leasing allows customers to worry less about running out of the original factory warranty before the lease is up.
- You are always driving a newer car
- Your vehicle will have some of the latest and best safety features and driver-assistance technology that will not be out of style when you are ready to turn the vehicle in when the lease is over.
- Some business owners may be able to take advantage of leasing certain types of vehicles and then turn them in accordingly and get something new in just a few years.
- Some dealers and manufacturers cover a certain amount of regularly scheduled oil changes, which could be most, if not all of the maintenance a leased vehicle will need. Many modern vehicles have an oil change interval of 7,500-15,000 miles. If you have a 10,000-mile-per-year lease, your vehicle may need, at most, 1 oil change per year.
- You can negotiate a lease, so long as it is not part of a manufacturer’s lease specials.
- You will pay less in sales tax.
- Some monthly, quarterly, or yearly lease specials may allow for no money down to sign for the lease.
- You could be able to drive a more expensive overall car for less money per month than what you could afford to purchase.
Cons To Leasing
- You do not own your car and it can be more difficult and expensive to get out of a lease early.
- While you can add extra mileage to your lease plan, you will have to pay sometimes 25 cents or so per mile added to your lease. However, if you go over your mileage without adding new mileage before you turn in your car, you can pay up to 75 cents or more per mile, which could mean quite a bit extra that you will owe when you turn in your lease.
- If your vehicle has lots of dents, scratches, damaged wheels, bald tires, paint issues, and interior damage, you could be on the hook for some expensive repair bills.
- Leasing contracts can be confusing to some because there are lots of variables, such as residuals, various percentages, and other numbers that can all run together when looking at the paperwork.
- In the end, a leased vehicle could cost you more than if you had purchased it if you add up any damage, mileage, and other fees you could incur when you turn it in.
- A car typically depreciates more in its first 36 months than at any other time. Meaning, that if you count the differences between buying and leasing, you could end up paying more over 3 years when leasing.
- Any modifications done to the vehicle need to be taken off before you turn the vehicle in.
Pros To Buying
- You enjoy long-term plans and don’t mind having something for 3-5 or maybe even 7 years.
- Every payment you make adds to the asset that you have. Meaning, the less you owe, the more of the car you own when you go to sell or trade it, which equates to positive equity.
- While it isn’t always advisable to do so, you can take out an extended loan of up to 8 years if you know you are keeping a car for that long to lessen your monthly payments.
- It can be easier, sometimes, to negotiate a car for purchase over a lease, depending on the brand.
- Putting more money as a down payment upfront can lower your monthly payment. Again, this increases the positive equity you have in your vehicle, making it an overall asset.
- Depending on the type and size of your vehicle, you could qualify to write the vehicle off on your taxes.
Cons To Buying
- Purchasing a car is another expense in your life, and buying a car, especially a new car, isn’t always the best option. Just because you can afford it doesn’t mean you should.
- When attempting to buy a car, you give your social security number to one or more dealers which then impacts your credit score from them checking to see how much car you can afford to buy, if you can buy at all.
- Some buyers can easily get in the red by having negative equity, meaning the vehicle is worth less than what is owed.
- More and more banks are trying to lock buyers into longer and longer loans, which while lowering your monthly payments, it takes even longer to pay the vehicle off. Depending on what your interest rate is, you are only adding more money to what you pay in the end.
- While you can trade your vehicle in every 3 years for something newer, like with a lease, sometimes that isn’t the best strategy. Depending on your loan interest rate or APR, or the length of the term, you could be losing money every time you trade your car for another.
- You can make more money selling your car outright, but it takes longer and you have to deal with tire kickers when trying to sell a car yourself.
- When the manufacturer’s warranty is up, maintenance costs will start to rise with the age of the vehicle.
After reading all of that it may seem that one is better than the other, however, they both have their strengths and weaknesses. As the buyer, you need to take into consideration quite a few factors that could place you in one direction over the other. If you mainly work from home and don’t drive a lot, a lease may be the perfect solution for you. However, if you do drive a lot, especially if you need to pick up your kids from school, take them to extracurricular activities, go to the grocery store, or make frequent out-of-town trips, then buying is probably going to be the best option for you.
If you are considering buying or leasing, the sales staff and service department at Penz Buick GMC can help to make sure you have all of the relevant information to make an informed decision.
At Penz Buick GMC of Rochester, we value our customers. You can find new Buick and GMC inventory, including the GMC Sierra 1500, all-new Canyon, as well as the Buick Enclave and Envista, plus an unmatched collection of used car, truck, van, SUV and crossover inventory at our dealership near you. Are you interested in leasing or financing your next vehicle? The Finance Department at Penz Buick GMC of Rochester can help you find the right lease offer or finance solution that fits your budget. We cultivate relationships with many banks, lenders, and other financial organizations to provide you with great options in purchasing your new vehicle. In addition to the comprehensive factory warranty that comes with your new vehicle, we offer extended warranty and protection programs to safeguard your investment. Get the best deals and specials available to you on a Buick or GMC. Our knowledgeable sales staff wants to help you find the perfect fit in a new Buick, GMC, or used car. We can’t wait to welcome you to the Penz family and help you find your new car or used vehicle. Your support and customer service doesn’t stop after you sign your deal. The expert Service Department at Penz Buick GMC of Rochester is always ready to help with any repairs or maintenance you might need to keep your vehicle running perfectly. Our Express Service Lane will get you back on the road quickly when you need basic maintenance like an oil change or tire rotation. Would you like to make your new car all your own with personalized upgrades? Our well-stocked Parts Department has all of the Buick and GMC authentic accessories you need for the best customization of your vehicle. Make your car, truck, or SUV uniquely yours to fit perfectly in your lifestyle. We are eager to help you on your car buying and vehicle ownership journey. Visit us today at Penz Buick GMC of Rochester!