Your driving habits and preferences, financial situation and objectives all play a part in determining whether you should buy or lease your next car. See which of the following statements best describe you, then consult the key to find out whether you’re better suited to buying or leasing.
1. I like to drive newer models and trade up every few years.
2. Driving 10,000 miles in one year is a lot for me.
3. My car is spotless and I have it serviced regularly.
4. I need to keep my monthly payments as low as possible.
5. Keeping my monthly installment low matters more to me than how much interest I pay.
6. I don’t have any savings for a down payment.
7. My car makes an important statement about me – it says who I am.
8. As long as I like the place I live, I’m happy renting or owning it.
9. A car is just transportation from point A to point B.
10. I do a lot of highway driving and really rack up the miles.
11. I take my car into the shop for major problems only.
12. I could increase my current payments if I had to.
13. Paying as little interest as possible is a high priority for me.
14. I plan to make a large down payment on the car.
15. The way to get value out of a car is to drive it into the ground.
16. Paying rent is throwing money away: you don’t have anything to show for it.
If statements one through eight describe you accurately, you are an ideal candidate for leasing a car. Lease agreements favor people who don’t drive many miles and maintain their cars well. If you like to drive new models and feel your car is part of your image, you are well suited for leasing – it allows you to trade up frequently without taking a big hit on depreciation. Finally, leasing is a good option for people who don’t have money for a big down payment and need to keep their monthly payments low. Your payments will be lower because you are only paying for the depreciation of the vehicle while you drive it, rather than the entire cost of the car.
If statements nine through 16 sum up your driving habits, you should probably buy a car rather than lease one. Leasing is an expensive option for people who drive long and hard and don’t tend promptly to maintenance and repairs. Buying is also a better choice if you can make a healthy down payment, want to avoid paying a lot of interest and can afford to make bigger monthly payments to pay your loan off fast. If you’re willing to keep your car for many years, the long-term cost of buying will also always work out to be less than that of leasing.