To lease or to buy? The Age Old Auto Debate
January 23rd, 2012
But the short answer to the question is…it depends.
The Case for Buying
If you’re in love with your car and likely going to be perfectly content to hang on to it over the long haul, then buying is definitely the way to go. You’ll save large amounts of money (thousands of dollars) over the long-term because, eventually, you’ll own the car and your monthly payments will disappear.
Keep in mind, though, that in the short-term, you’ll be paying significantly more to buy your car than you would to lease it, with monthly payments typically running 30%-60% higher for a purchase than for the same model’s lease.
The Case for Leasing
If you’re someone who just absolutely has to own the latest and greatest model every 2-3 years, then you’ll want to go with a lease. By doing so, you’ll be saving over what you would spend by purchasing a new vehicle at the end of each of those 2-3 year periods. Recognize, though, that over the long-term (i.e., many 2-3 year periods) you are going to spend thousands more than you would if you simply found a car you liked, bought it, and kept it over the long-term.
Renting – A Short Term Solution
As far as renting goes, it’s certainly not an economical approach to your transportation needs over any significant period of time. But if you need a car for vacation, or as a stop-gap measure while your car is being serviced or repaired, renting is a perfectly sensible way to go. Some dealerships will even offer a discount for long-term rentals as a way to service customers whose cars are undergoing extensive repairs or who might, for example, be trying to arrange transportation for a temporary work assignment out of town.
However, even a rental for a highly economical subcompact model will cost you in the neighborhood of $125 a week (before insurance costs – which can easily run $20 a day!), which translates to $500 a month in rental costs. By comparison, your $500 a month payment in a lease would get you a much higher-end vehicle.