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Buying vs. leasing
Determining if you want to buy or lease your new car requires consideration of the number of miles you plan to clock on the vehicle odometer as well as how much you can afford each month.
What leasing is
You likely will find leasing options through dealerships, which can be a great option if you have your sights set on a specific model. Leasing is worth exploring if you are interested in driving more expensive vehicles every few years rather than keeping one car for the long term. Leasing also has incentives, such as the ability to drive a higher-end vehicle, cash rebates, manufacture warranty and subsidized residual values.
How to decide between buying and leasing
Before you drive a car off the lot, you need to decide if you should lease or buy it. Consider three main factors: the number of miles you drive annually, the purpose of the vehicle and how much you can afford to spend monthly. Buying may be best if you want full ownership of the vehicle and can afford a higher monthly cost. Leasing may be the right choice if you appreciate the flexibility in vehicle types and can stick to the mileage restriction.
Just as with buying a vehicle, when you lease, you will have a monthly payment over the life of your contract. But when you buy, there is light at the end of the tunnel and eventually you won’t have to make any further payments. When you lease, unless you plan for a lease buyout, you will have a continuous car payment without achieving ownership of the car.
Use a lease vs. buy calculator before going to the dealership to better understand each option’s financial implications.