Choosing to lease or buy a car is a big decision, and Consumer Reports does a nice job in the article at the end of this post laying it all out there for you. Here are a few things to consider:
- How much money do you have for a car? Typically, the monthly costs are higher when you buy a car. However, you actually have an asset and something that can be resold after you finish paying for it. Leasing is usually less per month. Although, all you get for your money is the use of the car while you make the monthly payments. If you continue leasing cars, you’ll always be making a ‘car payment’ and can never use that money for something else. Which brings us to the next point…
- What is your opportunity cost? If you have a lower monthly payment on your vehicle by leasing it, what will you do with that extra money? Perhaps you use it to pay for college, so you don’t need to take out a student loan. Maybe you invest it and can make more money on it so you can save up to purchase a vehicle with cash rather than taking out a loan. Whenever you spend money, you need to think about what else you could have done with those funds – or the opportunity you may have missed!
- Read the fine print. If you choose to lease, check out how many miles you can drive without having to pay extra. Are you responsible to replace the tires and for oil changes? What happens if you spill something and can’t get the stain out?
This is just a start of things you should think about before signing any lease or purchasing a car. Read the full Consumer Reports article.