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Lease vs. Buy a Car – Easy Analysis (Reference Guide)

May 6, 2020

Choosing between leasing and buying can be a tricky thing to do. Follow this quick reference guide to learn whether you should lease or buy your next car.

Deciding whether you should lease vs. buy your next car can be a financially fraught decision. Essentially, you are doing an analysis to decide between a long-term investment or a shorter-term outlay.  Follow the steps below and you can be sure that you’ll make the right financial decision when it comes to choosing between lease vs. buy.

What you need to know about lease vs. buy

It’s important to know a few things about lease vs. buy when you are in the market for a new car.

What you need to know about leasing:

  1. When you lease a vehicle, you are basically paying to rent or borrow that vehicle for a set period of time.
  2. At the end of a lease you generally don’t walk away owning any “assets.” That means that at the end of the lease you can’t turn around and sell it.
  3. You don’t need to put down a lot of money at the beginning of a lease.
  4. Leasing is a form of financing where you only pay for the time you use the car–you don’t pay the full price of it.
  5. When you lease you don’t actually own the car, the company that holds the lease does.

What you need to know about buying:

  1. You are paying to own the car you have purchased outright and at the end of the purchase you own an asset that you can sell.
  2. You will generally need to put down a good chunk of cash upfront to buy a car.
  3. When you purchase a car you are using a loan, cash and/or the value of your trade in to buy it.
  4. When you purchase a car through financing the bank that you have financed the vehicle through holds the title until you pay off the loan. You will own the car when you pay off the loan.

Many buyers today are opting for leases for a variety of reasons. In fact, about 3 out of every 10 cars that leave dealer lots are leased, today. Why is leasing vehicles so popular?

  1. For one, interest rates have been historically low for a very long time making leasing a car very appealing to consumers.
  2. Car prices have risen significantly in the last few years and most buyers think it’s’ more economical to lease a car than it is to buy it (We’ll explain why this may not always be the case, later in this guide)
  3. Additionally, monthly payments remain the same throughout the life of a lease
  4. Many manufacturers still offer included maintenance in most deals.

But leasing isn’t always better than buying. Read on to find out why.

Benefits of leasing a car

Some pros of leasing a car include:

Disadvantages of leasing a car

There are a number of cons to leasing a car. They include:

Benefits of buying a car

While buying a car is a costly proposition, it has many benefits including:

Disadvantages of buying a car

There are a few cons to purchasing a car and they include:

How do you compare lease vs. buy a car?

To compare lease vs. buy a car you should take three things into consideration:

Monthly costs should include payments, insurance and maintenance. If you want to get the lowest payments, leasing might be best for you, but bear in mind a few things:

You should also consider insurance costs.

Be sure to add in maintenance costs, too.

Consider the costs of down payments or up-front capital cost reductions, too. These are fees that you will be required to pay when you purchase or get a loan to purchase a vehicle.

Finally consider your needs and wants since a car purchase or lease is much more than just a functional buy. It’s important to consider things like:

Once you have run the numbers and considerations for each of these items, you can determine which option is better for you. Remember that choosing whether to lease vs. buy is often a very personal decision and you need to take into consideration all aspects of your lifestyle and needs as well as your budget restrictions in order to find the right option for you.

What is cheaper, leasing or buying?

Over time, buying is cheaper than leasing –particularly if you plan to keep your car for 6 years or more. If you took the cost of purchasing your car and amortized it (or split divvied it up) over the number of years that you owned it, you’d find that you would pay less over the life span of that vehicle than you would had you leased it. While you could get into a new vehicle every 3 to 5 years, over time, you’d pay considerably more to lease than you would if you bought – even when you include maintenance and repairs.

Is leasing or buying better?

In general buying is better than leasing because at the end of the loan you own an asset that you can sell or trade in. Of course, this is highly dependent upon your own financial situation – but a good general rule of thumb is that buying is always better than leasing.

When should you lease vs. buy a car?

You should lease a car over buying it if you have very good credit, have specific needs (like entertaining clients or using it for your business) or if you want the latest and greatest technology. You should also be comfortable always having a car payment if you decide to lease vs. buy.

How to find Kia lease deals

There are two ways you can find Kia lease deals. You can lease quickly and easily using our app! The site uses geolocation to find out where you are and automatically finds deals for you. Look for the model and trim you like and you can find nearby offers. We’re really meticulous about making sure the deals you see in our app are actually on the dealer lots, too.  You can also find Toyota lease deals visiting Kia’s site and putting in your zip code. Once you do, a list of deals in your area will come up. Just know that you might find that your chosen vehicle is not in the dealer’s inventory, lease deals change month to month so be sure to check regularly.

How to find Hyundai lease deals

To find Hyundai lease deals visit Hyundai’s site and put in your zip code. Deals will appear based on your state and location. It will detect where you are and show you nearby deals. Lease quickly, easily, and securely using our app. Deals change monthly so check back on the regular.

How to find Nissan lease deals

If you’re looking for Nissan lease deals, it may suit you to check out the Nissan page on AutoGravity. There you will find deals that are in your area and meet your needs. You can also find Nissan lease deals, by  visiting Nissan’s site and submitting your zip code. Deals will show up based on where you are looking. Nissan’s lease deals also show up on our site. The deals change monthly so be sure to check back soon.

So, should you lease or buy your next vehicle?

It all depends on your needs, wants, and what your life is like. Follow this quick reference guide above to determine what to do when analyzing between lease vs. buy.