Should You Lease or Buy A Car: Interview with a CFP® and Owner of a Car Dealership

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Written By gbfadmin

When clients are looking to purchase a new car one of the most common questions that we receive is “Should I Buy or Lease?”  To get the answer, we interviewed a Certified Financial Planner and the owner of Rensselaer Honda to educate our audience on the pros and cons of buying vs leasing.

About Michael……...

Hi, I’m Michael Ruger. I’m the managing partner of Greenbush Financial Group and the creator of the nationally recognized Money Smart Board blog . I created the blog because there are a lot of events in life that require important financial decisions. The goal is to help our readers avoid big financial missteps, discover financial solutions that they were not aware of, and to optimize their financial future.

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Frequently Asked Questions (FAQs):

Should I buy or lease my next car?
Whether you should buy or lease depends on your financial goals, driving habits, and how long you plan to keep the vehicle. Buying is generally better for long-term ownership, while leasing can make sense if you prefer lower monthly payments and like driving a new car every few years.

What are the advantages of buying a car?
Buying a car allows you to build equity and eventually drive payment-free once the loan is paid off. You have no mileage restrictions, can customize the vehicle, and can sell or trade it whenever you choose. Over time, purchasing is typically more cost-effective than leasing.

What are the downsides of buying?
The main drawback is higher upfront costs and larger monthly payments compared to leasing. You’re also responsible for the car’s depreciation, which can reduce resale value if you trade it in after only a few years.

What are the benefits of leasing a car?
Leasing generally provides lower monthly payments, minimal upfront costs, and the ability to drive a new car every two to three years. Lease agreements often include warranty coverage, which reduces maintenance costs during the lease term.

What are the disadvantages of leasing?
Leasing comes with mileage limits—usually 10,000 to 15,000 miles per year—and penalties for excess wear and tear. You don’t build equity in the vehicle, and at the end of the lease, you must either return it or start a new lease. Over many years, leasing repeatedly can cost more than buying.

Who should consider leasing?
Leasing may be ideal for individuals who prefer driving newer cars with the latest features, don’t drive long distances, and want predictable monthly costs without worrying about long-term maintenance.

Who should consider buying?
Buying is best for people who plan to keep their vehicles for many years, drive more than the average mileage, or want to eventually own a car outright without ongoing payments.

What financial factors should I consider before deciding?
Compare the total cost of ownership over the time you expect to use the car, including monthly payments, insurance, maintenance, taxes, and resale or lease-end fees. A financial planner or dealership finance manager can help run the numbers based on your budget and driving habits.

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