Should I buy or lease my next car?
Whether leasing is a good option for you depends on a variety of factors, including how many miles a year you tend to drive and how long you want to keep a car. (Photo courtesy of Angie's List member Charles C. of Bristol, Conn.)
Around this time of year, as automakers start rolling out new models, you may be tempted to refresh your ride.
When it comes to getting a new — or new to you — car or truck, you’ve got three options: buying new, buying used or leasing.
The most basic fact to know about leasing is that it’s essentially a long-term rental of a vehicle, usually a brand-new one. A typical lease lasts for 36 months, though some dealerships offer them for one to five years. Monthly lease payments can range from $160 to well over $1,000, depending on a vehicle’s make and model.
Whether leasing is a good option for you depends on a variety of factors, including how many miles a year you tend to drive and how long you want to keep a car.
Reasons to lease
In talking to auto dealers who are highly rated by members of Angie’s List, our researchers found that these are among the top reasons to lease:
- Lease payments are generally lower than loan payments.
- Because most leased cars are brand-new or newer, the driver gets to enjoy the latest features and technology.
- Leasing agreements may include more coverage under the factory warranty than what a buyer would receive. Also, because leased vehicles tend to be new or newer, maintenance costs are lower than purchased cars that are driven beyond their warranty time frames.
Reasons to buy instead:
Among reasons that leasing might not be your best option:
- At the end of the lease agreement, you won’t own the car. However, if you like the vehicle, you may decide to buy it when the lease ends.
- Lease agreements may cap annual mileage at 30,000 miles or less, so they aren’t a good idea if you drive more than the average. Driving more miles than allowed on the lease can result in a fee of 10 to 25 cents a mile.
- If the leased vehicle receives more wear than is permitted within the agreement, you may owe the dealer money to make up the difference.
Before you lease
If you decide to explore the option of leasing, be sure to work with an established, reputable dealer that can also provide maintenance and repair service. Ask friends and family for recommendations, and consult online reviews from a trustworthy source.
Be sure to read and fully understand your lease agreement before you sign it. Also, ask the dealership about gap insurance coverage. If you have it and the leased car is wrecked, the insurance will cover the difference between the car's actual market value and the remaining balance to pay the lease off.
Angie Hicks is the founder of Angie's List, the nation's most trusted resource for local consumer reviews on everything from home improvement to automotive repair. Follow Angie on Twitter @Angie_Hicks.