Leasing vs Buying a Car: Which Is Right for You?
The decision between leasing and buying a car involves more than comparing monthly vehicle payments. Leasing might make it easier to get behind the wheel of a newer vehicle, while buying allows you to build equity in a vehicle you own. Review the pros and cons of each to help you make an informed decision.
Is It Better to Lease or Buy a Car?
The right choice depends on your budget, driving habits and long-term goals. Before deciding, think about:
- How long you plan to keep the vehicle
- How much you drive each year
- How the monthly payment fits into your budget
Leasing and buying work differently and come with distinct costs, responsibilities and benefits. Leasing a car means paying to use a vehicle for a set period of time rather than purchasing it. You’ll return the vehicle when the lease is up. Buying means you become the owner of the vehicle when you finish paying for it.
Taking time to consider what's most important to you may help you determine which option is the better fit.
What Are the Benefits of Leasing a Car?
Depending on your needs and budget, leasing may offer:
- Lower monthly payments and upfront costs: It often costs less per month than buying the same vehicle.
- Newer vehicles: Leasing may allow you to drive a new car every few years.
- Warranty coverage: Many leased vehicles remain under the manufacturer's warranty during the term.
If you really like the car, you may be able to buy the vehicle at the end of the term.
What are the downsides of leasing a car?
Leasing may not be the right fit for every driver. Potential drawbacks could include:
- Annual mileage limits
- Fees for excess wear and tear
- Costs for ending a lease early
- No ownership at the end of the lease term
- Required maintenance and insurance standards
- Potential charges for missing equipment or damage
If you lease one vehicle after another for many years, the overall cost may be higher than purchasing and keeping a car long term.
What Are the Benefits of Buying a Car?
The benefits of buying a vehicle may include:
- No mileage limits
- Ability to sell or trade in the vehicle
- Freedom to keep the vehicle as long as you want
- Flexibility to choose your own maintenance and insurance coverage
Keeping a car for many years may help lower your overall transportation costs because you can keep driving it after it's paid off instead of starting a new loan or lease.
What are the downsides of buying a car?
Some tradeoffs of buying a car may include:
- Higher monthly payments
- Vehicle loses value (depreciation) over time
- Reduced resale value from high mileage or wear and tear
- Higher borrowing costs on longer loan terms
Should I Get a Car Loan Preapproval?
If you're not sure how much car you can afford, a loan preapproval may be a helpful first step in your search for a new vehicle. It gives you an idea of the amount you may be able to borrow, along with estimated loan terms and interest rates.
Going into the car-buying process with this information could help you compare financing options and make decisions that better fit your budget.
How Can KeyBank Help Me Buy or Lease a Car?
KeyBank offers fixed-rate auto loans for new and used vehicles, as well as auto loan refinancing. To compare your options, try our Lease vs. Buy Car Calculator. It could help you estimate monthly vehicle payments to find the best value.
Visit a branch or call 1-800-KEY2YOU® (539-2968) to talk with an experienced banker. They can help you review available financing options. Dial 711 for TTY/TRS.