If you are in the market for a new vehicle, you have several things to consider. Beyond the make, model, and features, knowing whether it is more beneficial to buy or lease your vehicle is critical.
There are advantages and disadvantages to both options, but making the right decision comes down to a few key criteria:
- How long will you keep the car? If you are keeping it less than 3 years, then leasing may make sense. Buying and selling vehicles usually incurs costs that are best spread out over long-term ownership.
- How many miles do you anticipate driving? Leasing a car only makes sense if you plan on driving 12,000 miles or less. Anything more and you will end up owing big when your lease ends.
- What is your estimated wear and tear? If you expect your car to sustain heavy wear, buying makes more sense. If you lease, you will be penalized for any excessive wear and tear beyond that which is expected from every day use.
- What is your expected total cost? In the end it all comes down to cost. After running the above-mentioned scenarios, which is the better deal? Total cost of ownership, including monthly payments, insurance, and maintenance should not total more than 15% of your total budget.