Standup: I’m Kristin Arnold. If you’re in the market for a new car, one of your first decisions will be whether to buy or lease. Which is the better option? Bankrate.com helps you decide…

Voice over 1: When it comes to cars, leases are ever-more popular. The reason why is no mystery: that’s the only way many people can afford the payments. But which method is really the best way to keep more of your money in your pocket?

Voice over 2: Let’s find out with a simple example: a new car with a sticker price of $27,000. First we’ll look at buying: financing the entire 27 grand at 6.9%, and your payments will be $821 a month. Times 36 months, you pay a total of about 29.5. But after three years you’ve still got a car worth $14,000…so your actual cost is 15,500.

Voice over 3: Now look at a typical lease: With $1,000 down, a three year lease might be $485 a month. Total for 36 months is $18,460: about three thousand dollars more than buying. Even if you earn interest on the money you save with those lower monthly lease payments, buying still wins.

Voice over 4: The longer you keep the car, the more sense buying usually makes. Using five years instead of three, for example, you’ll come out ahead even more.

Voice over 5: Bottom line? While there are factors that could make a lease a better deal, generally you’ll keep a little more money in your pocket by buying rather than leasing.

Standup: But since there are differences in cars and deals, you should always do the math yourself. And don’t worry if numbers make your eyes glaze over: there are free calculators, right here on Bankrate.com that can help. Just plug in the numbers and you’re off to the races. For Bankrate.com, I’m Kristin Arnold.

Promoted Stories