Your next car: Buy or Lease?

It’s time to get a new car. Perhaps you have a new job and need something reliable, or maybe you are starting a family and need a car with some more space. The decision to get a new car is a big one, as it’s the most expensive purchase you will make, besides housing.

Deciding which car you want is the easy part, the hard part is deciding how you will pay for it. The question to buy or lease has been debated for years, and there are arguments for both sides.

Most often, the decision on whether to buy or lease falls on the individual. Here are some things to consider when making this decision.

How are your finances?

Your financial situation is a big factor.

Do you have enough saved up to buy a car outright or enough for a down payment? Does your monthly budget have enough room for a car payment?

Generally, the monthly payment for a lease is much lower than the monthly payment for financing. Sometimes, the lease payment can be as much as 60% less than a car payment.

Do you use the car for work?

If the answer is yes, my response, unfortunately, will vary. If you do use the car for work and you are self-employed, then those lease payments can be deducted from your taxes.

The flip side to that is a lease comes with a limited amount of miles. Usually, the limit is 12,000 miles per year, but that number can be increased for a larger monthly payment.

So if you use the car for work and your miles are, generally, low, a lease is a great option.

How long do you want to drive the car?

How long you desire to have the car for is another huge factor in this decision. If you would like to drive the car for a couple of years, then change to a new one, lease it.

If you would like to drive the car for as long as you possibly can, then buy it. The distinct advantage that buyers have in this area is the longer they hold it, the less expensive it gets.

I say this using the price of the car divided by the length of time you hold it for because as we know, the older a car gets, the more repairs it needs, which adds up to more money spent.


Which brings me to my next point, repairs. A huge advantage of a lease is it’s covered under a warranty. Any damage to the vehicle or any sort of mechanical break down (other than the tires) is covered and paid for by the dealer.

When you buy a vehicle, the repairs are mostly on you. More often than not, when buying a newer car, you will get a limited warranty. If you are buying a used vehicle, you are out of luck. Repairs come out of your pocket.


Buying your vehicle comes with advantages and disadvantages. Some of them are listed above, but I will go ahead and list them all below.

  • You own it so you can do what you want with it – customize it, beat it up, and drive it forever
  • You aren’t limited by your mileage
  • Monthly payments are larger
  • Generally, less expensive over the long-term
  • If you keep the car for a long time, you can go many years without a car payment
  • You need to pay and deal with maintenance costs
  • You have to decide what to do with it when you want to change cars


Just like buying, leasing comes with its unique advantages and disadvantages. They are all listed below.

  • Smaller monthly payments
  • Limited by mileage
  • Get a new car every couple of years
  • Get a nicer car for less money
  • Fees are high if you go over mileage or end your lease early
  • Covered under warranty so dealer picks up the cost for repairs and maintenance
  • Probably need more extensive insurance coverage


The decision on whether to buy or lease needs to be made by the individual. I, myself, lease my current car. I could not decide on what I wanted, so I leased a Toyota Corolla and have been very happy with my choice.

When my lease is up, I would like to roll my accumulated lease payments into a down payment for a used car, but we will see.

Use the information in this post to help you make your decision. Do your research and calculations so you know you are making the best choice.

So readers, do you buy or lease? And why?

Published by

Financial Health and Wealth

I am a Financial Consultant and Blogger. I live in the Greater Milwaukee area. I am married with a six-month-old son. My goal with this blog is to educate people to better understand basic finances and to help save them money along the way

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