Car Shopping - Lease vs Buy

Weigh Your Options before You Make a Move


Picture: multiple vehicles of different colors lined up in a parking lot. Used to describe car shopping and leasing versus buying.


As any car owner will tell you, choosing the right car involves decisions, decisions and more decisions. Among the first and most important is determining where to buy the vehicle and how to finance it.

Buy or Lease?

Today, one out of every four Americans chooses to lease, rather than purchase, their vehicle. 1 The reason is simple: leasing keeps drivers behind the wheel of a more expensive vehicle for less money and gives them access to late model cars that require minimal maintenance. You're a candidate for leasing if you drive 10,000 miles or less per year, are gentle on your vehicles, and don't mind making a car payment every month, year after year.

In contrast, it's probably more advantageous to buy if you do a lot of driving, like to keep a car for years after the loan ends, are willing to put time and money into maintenance, and favor functionality over style. 2

Buy New or Used?

There's a reason financial experts advise against buying new cars – their value depreciates by 10% the moment they leave the lot. 3 Still, drivers who don't take that advice enjoy other new car advantages – manufacturer warranties, roadside assistance, and the latest safety features – that help compensate for the higher price. When it comes to financing, new cars typically require a lower down payment and offer longer duration, lower interest rate financing than used vehicles. 4

Of course, the big draw of a pre-owned car is a lower purchase price and slower depreciation. 5 More and more drivers are purchasing late model, low mileage cars that have come off lease. Dealers have hundreds to offer at prices that can be very favorable. Yet even the value of these vehicles will be impacted by depreciation until they reach their fifth birthday. Some car experts suggest you'll get the most for your money if you find the "sweet spot" - older age and low mileage. 6

Buy from a Dealer or Private Seller?

You're likely to pay more for a used car if you buy it at a dealership. Essentially, you're paying for overhead and the cost to get the vehicle ready for sale. On the plus side, dealer warranties and certified, pre-owned programs offer protection that private sellers can't provide. 7

No matter where you decide to buy your next new car, always remember to get pre-approved before you start shopping. Getting pre-approved lets you know how much car you can afford. Learn more about your financing options


1 http://www.usatoday.com/story/money/cars/2016/03/03/report-more-new-cars-leased-than-ever/81286732/

2 http://www.usatoday.com/story/money/cars/2016/03/03/report-more-new-cars-leased-than-ever/81286732/

3 https://www.carfax.com/guides/buying-used/what-to-consider/car-depreciation

4 http://usnews.rankingsandreviews.com/cars-trucks/best-cars-blog/2016/03/New_vs_Used_Car_Loans_Why_Are_Used_More_Expensive/

5 https://www.carfax.com/guides/buying-used/what-to-consider/car-depreciation

6 https://www.carfax.com/guides/buying-used/what-to-consider/car-depreciation

7 https://www.cars.com/articles/should-i-buy-a-new-or-used-car-1420680928799/