Should you Lease or Buy your next Car? It Depends

October 27, 2016
Every Dollar Has a Job
Any time you hear "always lease" or "always buy," the "always" tells you the advice will probably never work for you - Steven

Are you better off leasing or buying a car?  The answer depends on many factors.

 

 

You want to evaluate the cost of having the car during the period you own or lease it.   That includes the down payment, loan payments and interest or lease payments, insurance, maintenance not covered by any maintenance agreement, repairs not covered by warranty or extended warranty, and gas.   

When you buy a car, your total cost is reduced by what you get when you sell or trade it in.

When you lease a car, have lease payments and no trade value.  

Note that the amounts you can deduct for business use also differ: you can depreciate a car you buy, and deduct financing charges, for the percent of business use, but only take lease payments on a car you lease for the percent of business use.

Quick guess: 

If you want a new car every few years, leasing is probably better;

But if you typically own a car for six years or more, which would be at least two successive leases, then buying probably works better.  

Contact me if you need more car-related advice!

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