Obviously, the major downside is at the end of the term of the lease, you do not own the car, so either you have to get into a new lease or decide to purchase a car at that time.
So side by side, let’s take a look at the pros and cons of leasing:
- Lower monthly payment
- Drive a new car every few years
- Potential for business tax deductions
- Better warranty protection and maintenance options
- Must have stable monthly income and good credit
- Strict mileage parameters
- No equity in your vehicle
- Likely to pay more over time
Is buying a car right for you?
Purchasing a new or used car is a large financial decision. With so many things to consider, it can be overwhelming to know if buying a car is the best choice for you. The good news is once you pay for the car (or pay off your auto loan), you own the car and have an asset — even if it’s a depreciating one.
Considering paying all cash? You might want to rethink that idea. The moment you drive a car off the lot, the value goes down. So it doesn’t make sense to put too much down on the car. It’s typically best to put down enough to cover the closing costs and make your monthly loan payments affordable within your budget.
After the auto loan is paid off, you may have quite a few years of driving the car without a monthly payment, which is enticing for car owners.
Now let’s take a look at the pros and cons of buying:
- More options
- Ownership and equity
- Free to customize your vehicle
- No end-of-lease charges or fees
- Higher monthly payments
- More responsibility after the warranty period
- Higher repair costs
Whether you decide to lease or buy a vehicle, it often comes down to your personality and preference. How many miles do you drive every year? Does luxury or practicality matter more to you? Do you like doing minor repairs? Take time to consider what matters most and make the right choice for you. And if you do decide to buy a vehicle, working with a financial professional to help you make the right decision regarding how your next car can be valuable.
Financial advice for real people, by real people. You shouldn't need a degree to understand your money. Join Head of Education, Brittney Castro and Altruist mentors as they break down financial tips and strategies in a real way to help you finally understand how to achieve your financial goals faster.