Buying vs Leasing a New Car

When the time comes to get behind the wheel of a new car, the diversity of decisions to make can often feel a little dizzying. Not only will you need to consider the style of vehicle to suit you best and what monthly budget you can comfortably stretch to, but also whether car leasing or car purchase will serve you better in the long run.

Happily, when armed with the right know-how, there’s no need to view the process ahead with trepidation. Few things are more satisfying than taking ownership of a new vehicle, plus making a great deal with a dependable and supportive auto broker can be exhilarating.

Ultimately, the choice between these two approaches is a distinctly personal one, and it isn’t for anyone else to say which one is right for you. However, some expert guidance can certainly aid you along the way. So with that in mind, read on as we examine car buying vs leasing—so that you can steer your own course with confidence!

The Ins and Outs of Car Leasing

The blend of recent automotive market inventory shortages and trends in dealership markups have made securing a fantastic deal either on car leasing or car buying a little more challenging than in the past. However, the core factors likely to influence your decision between the two strategies remain the same and there are still amazing deals to be found. So, what are the advantages of seeking out car leasing services from a trusted auto broker?

If you are someone who loves nothing more than driving the newest and highest-end models of any vehicle, car leasing offers the potential to achieve this while enjoying lower monthly payments. Fundamentally, a car lease is a rental contract, so rather than paying off a loan taken out to buy a vehicle outright, you are paying a monthly fee that will allow you to drive your vehicle of choice for a finite period.

When a car lease comes to an end—typically after 36 months, although other terms are sometimes offered—you’ll have the option to buy the vehicle or return it to the lessor. Because of the short time-frames on most car lease agreements, drivers also often benefit from driving a vehicle that is under warranty for the duration, taking any potential sting out of the tail of unforeseen maintenance costs.

Pros of Car Leasing

• Monthly payments are generally lower than they would be if the same vehicle was purchased with financing
• Leased cars are usually in their prime and under bumper-to-bumper warranty
• Your car lease will likely cover regular schedules maintenance, although you’ll still have to cover things like tires and road tax
• You can change model and vehicle style with each new car lease
• Car leasing facilitates enjoying constant access to the latest safety features
• You won’t need to worry about selling the car later
• A car lease doesn’t always require a large down payment, but there may be some administrative fees to pay at the beginning of the contract
• Leasing may provide you with tax advantages

Cons of Car Leasing

• While monthly costs may be smaller, the cost overall will be higher because your payments are not building toward any kind of equity
• Car leasing means committing to making monthly payments in the long term rather than eventually arriving at full ownership
• Car lease contracts specify mileage limits—often between 10,000 and 15,000 miles per year—and drivers who exceed them will have to pay a penalty
• There can also be wear-and-tear penalties to pay if the car’s condition is not maintained or if it is modified in any way
• If you decide to cancel the lease before its end, there might be an up-front early termination fee to cover

A Simple Overview of Car Buying With Finance

Unless you can buy the vehicle of your dreams outright, financing is an excellent option to get you on the road. In contrast to car leasing, making a car purchase with financing means securing a loan from a creditor so that you can buy a vehicle outright. As with a car lease, you will make monthly payments, but when all of those payments are made, the car will be yours.

What kind of deposit is called for and the amount of interest that you will pay overall is typically determined by your creditworthiness. If you enjoy a strong credit score, you may be able to access additional favorable offers. However, if your credit isn’t quite so strong, you can also influence the size of the monthly payments by altering the amount of money you put down upfront and the duration of the payment period. Keep in mind, though, that the longer you take to pay off your loan, the more interest you will pay overall.

Pros of Car Buying

• Monthly payments will inevitably be higher than they would be with a car lease for the same vehicle, although longer loan terms may be available
• Once the loan is paid, the car will be your asset to keep
• You won’t need to worry about mileage limits and can modify the vehicle as you wish
• There will be no penalties for wear and tear, although it will still impact the ultimate value of the car
• Once you have completed the loan term, you’ll be able to stay on the road with no monthly payments at all
• Car financing makes it possible to enjoy ownership of a higher-end vehicle without saving the full value of the car ahead of time

Cons of Car Buying

• Owning the car long-term will mean covering all maintenance costs and taking responsibility for faults once the warranty expires
• Fluctuations in car values and changes in the resale market could impact your ability to sell the car later on
• You will probably need to make a down payment, although full financing may be available to those with great credit scores
• If you decide to sell the car before all payments are made, you will need to cover what remains of the loan and potentially a penalty for early closure, even if the car has depreciated quickly

An Auto Broker’s Insights on Car Buying vs Leasing

When it comes to identifying whether car leasing or car purchase represents the right route for you, there is immense value in gathering information as opposed to making an impulsive call. It is important to understand not only upfront and monthly payments, but also how much you will be paying overall, potential maintenance costs, and what happens if you wish to exit an agreement early.

Finding a collaborator who will be transparent about all aspects of pricing and committed to securing you the right deal is an excellent place to start. A dedicated car broker from the Clutch team will readily shop around on your behalf before walking you through the options available—allowing you to make an informed decision with all the facts to hand. Are you ready to partner with an ally as you explore options to lease or buy a car? For more information, connect with the Clutch team today.