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Should I buy or lease my next vehicle?

Leased vehicles accounted for 31% of new vehicle sales in 2016, according to Edmunds. Leasing can be a great option to get you lower payments and get you into a new car, but you will have to factor in how much you drive and your goals to decide if buying or leasing is right for you. 

Let’s go over a few benefits of buying and leasing to help make your decision a little easier.

Benefits of Leasing

Leasing a vehicle allows customers to trade into a new vehicle usually much faster than they would be able to if they were purchasing a vehicle. This means they are always able to get the latest and greatest in safety and technology.

How leasing works: When buying a car, you are responsible for the entire purchase price. When you lease, you only pay for the difference in the vehicle’s price and the vehicle’s expected value at the end of the lease. This amount is also known as a residual value. Essentially, you just have to pay for the depreciation that occurs over the term of your lease agreement.

Small Down Payment: Leasing is perfect for customers who do not have a large down payment or do not have a vehicle that gives them much back as a trade-in. Many leases do not require money down at signing and it is easy to find one that only requires a couple thousand dollars down, but it is important to remember that just like purchasing, more money down will lessen your monthly payment.

Warranty Coverage:  The average lease term lasts three years, which means when leasing a new Ford or Lincoln vehicle, you will be covered under the bumper to bumper warranty for the entirety of your lease. Some leases can even include basic maintenance, so the only costs you are left with is insurance and fuel.

Tax Savings:  Leasing may save you money in sales tax as well! In Wisconsin, and some other areas, you’ll only have to pay sales tax on the amount you spend at signing and on your monthly payments (and you don’t pay taxes on the residual value.) When you purchase a vehicle, you are responsible for paying tax on the entire purchase price.

What happens at the end of my lease? There’s no need to worry about selling your vehicle or trading it in as you have options versus obligations.
Option 1: Buy the vehicle for lease end value and keep it.
Option 2: Buy the vehicle for lease end value and sell or trade the vehicle with equity.
Option 3: Simply drop the car off at the dealership and walk away!

Benefits of Buying

No Mileage Restrictions:  When you buy, there are not restrictions to how many miles you can drive each year, though some lenders may put restrictions on use of a vehicle as an Uber or Lyft driver. If you live in a rural area, commute to work, or travel long distances, buying may be a wise choice.

No Monthly Payments After the Loan:  When you pay off the vehicle, you won’t have any more monthly car payments. Leaving you with only fuel, maintenance, and insurance costs. If you are the type of buyer who likes to drive your vehicle for a very long time, leasing may not be the best choice for you.

No Customization or Excess Wear Fees:  Car buyers can customize their vehicles as much as they like. Some of these customizations may even add value when it comes time to sell the vehicle. Any changes to a leased car may cost you at the end of the contract. Buyers who miss a regular service interval or two also do not have to worry about any fees when they sell the car but a lease customer might.

Final Thoughts

Every car buyer is different, so there is no single answer to whether buying or leasing is better. We advise you to look at the costs and benefits of each choice and align them with your needs and budget. Your choice may depend on the current incentives that are available on the vehicle you are considering as well, so be sure to talk with our knowledgeable sales consultants about all of your options.

Whether you choose to buy or lease your next vehicle, Eau Claire Ford Lincoln & Quick Lane will be happy to assist you in your car buying and service needs! If you have questions, please contact us at 715-852-1000 or stop in at 2909 Lorch Avenue to see us in person.

Sources:

Vincent, John M. “Buying vs. Leasing.” U.S. News & World Report, U.S. News & World Report, 2 Feb. 2018, cars.usnews.com/cars-trucks/buying-vs-leasing.

Lease Market Report. Edmunds, 2017, pp. 2–2, Lease Market Report.