Which is Better: Buying or Leasing a Car?
According to the aptly-named statistical organization Statista, there were more than 263 million vehicles registered in the United States alone. Cars are the most popular type of vehicle, more fuel-efficient, holding more passengers, and generally cheaper than other vehicles.
Americans rely on cars to drop their children off at school, go grocery shopping, transport to and from work, visit friends and family, ride around to reduce stress or pass time, when hitting the town for a night of recreation, and innumerable other responsibilities. Whatever they’re used for, cars are generally purchased outright with cash, sometimes alongside trade-ins of existing vehicles, or leased, in which lessees submit monthly payments in return for using them - essentially renting cars similar to housing.
While buying and leasing both result in direct access to vehicles, both offer unique benefits and disadvantages, largely unknown in their entirety to most consumers. Let’s dig deeper - which is better, buying or leasing a car?
What are the basics of buying and leasing?
Car ownership provides buyers with unfettered access to and usage of vehicles. Leasing, however, results in returning leased cars back to their respective dealerships - they actually own cars being leased, although they’re essentially letting lessees drive them without direct supervision for months, if not years, at a time.
Buying requires owners to pay the purchase price of cars being bought all at once, rather than distributing the payment throughout long periods of time. However, some people choose to finance their vehicles, meaning a financial institution who they remit monthly payments to owns them, repossessing it if they don’t meet monthly payments. Financing is the same as buying insofar as ownership transfers from dealerships to banks, although consumers are able to modify or drive them however long they desire without incurring penalties.
Leasing, on the other hand, only allows set mile limits, not being able to modify them, and - most notably - having to return them upon lease end.
Drivers who lease vehicles aren’t required to repair them unless they purposefully damage their cars. Lessees always reap the benefit of warranties, in which they’re not liable for part or system failures, instead passing liability onto dealerships or manufacturers.
While people who buy cars can do literally anything they want to or with them, they’re also entirely responsible for repairs. Financially speaking, leased cars are the safest cars. Although modifications aren’t always repairs, per se, buyers incur the added benefit of customizing their vehicles as they see fit.
Recouping purchase price
As mentioned earlier, leased cars must be returned following lease end, ranging anywhere from a few months to several years. Those who buy new cars are entitled to sell them at their convenience, if they choose to do so, effectively making them one of the safest cars if drivers are able to recoup most of their purchase price. Lessees forego the entire value of monthly payments submitted towards their leases, barring the possibility of recouping their investment in the event they want a new car, or simply need money.
Buying, as already covered, is essentially an all-at-once down payment. Leasing almost always requires sizable down payments, although much smaller than their purchase price.
All considered, leasing is significantly cheaper than most car purchases, as lessees don’t have the freedoms of unlimited miles or rights to sale. While not every driver can purchase a car, those with consistent incomes can lease a vehicle, albeit not the car of their dreams, if they don’t have enough disposable income.