When shopping for a new car, you’ll probably be asked if you want to buy or lease. What does that really mean? Though you may have heard one is better than the other, there are distinct advantages and disadvantages to buying and leasing that vary from person to person.
Leasing is a more flexible option. Basically, you rent the vehicle from the dealership, paying the depreciation value over the time you have it. There is usually a small fee (sometimes called a down payment or deposit), and there are often mileage and damage restrictions. The plus to leasing is that you get a new car every few years, and pricing is generally cheaper. If you’re not looking to hold on to the same car for years and years, leasing is the way to go.
Buying is a great option for people who can afford large monthly payments. You will usually make a large down payment between 5% and 20% of the car’s sticker price. Then, after financing the rest through a bank or other lender, you will receive the title after you pay off your debt. Though a long process, the advantage to buying is that you get to keep your car when you’re done. For people looking for more of an investment, you should buy.