When it’s time for a new car, the choice between buying or leasing can be a tough call, especially with persistent supply chain issues and rising interest rates.
That’s why we’re working for you on how to decide which option is best for you.
Oscar Pagan said buying a car this past January was a no-brainer.
“The option to own is always better in my opinion than to lease because at least you have an asset and if anything, ever happens you can sell that asset,” Pagan said.
But deciding whether to buy or lease your next car can be a tough decision.
And with today’s higher car prices – the average price paid for a new car is nearly 50-thousand dollars, and higher interest rates above six percent — you’re likely looking at bigger monthly payments no matter which you choose.
Consumer Reports said on the surface leasing can be more appealing than buying.
“First, it’s always under warranty. Second, you’re always driving a car with the latest safety features. And third, if you’re working part-time in the office and part-time at home, you’re not driving as much. So that means you probably won’t exceed the lease’s limits on how many miles you can drive,” Jon Linkov with Consumer Reports said.
CR said monthly payments are usually lower with a lease because you’re not paying for the full value of the car.
That means you may be able to drive a more expensive vehicle than you’d normally be able to afford.
While that might sound appealing, there’s one hard fact about leasing … at the end of the term, you’ll have to return the car because you don’t own it.
“a major downside of leasing is that you have an endless cycle of paying for a car. You’re never without a car payment because as soon as the one lease is up, you have to either buy a car or get into another lease,” Linkov said.
CR said it’s difficult to make a fair head-to-head comparison, but in general, two back-to-back three-year leases will always cost more compared with buying and owning a car over that same period because the buyer owns an asset – the vehicle – after that period.
If you do choose to buy your next car, CR said there are some easy ways to save.
Don’t rely on the dealer for the best loan rate.
Instead, check if your bank or local credit unions offer lower rates.
CR said if your heart isn’t set on a specific make and model, shop around for financing incentives that might be offered by manufacturers.
And even if you choose to lease, CR said you should still negotiate the price of the car and the terms of the deal.