With so many special promotions advertised for car leases, you might wonder whether it’s better to lease or buy a car. If you’re in the market for a new car, you may want to weigh these pros and cons of leasing versus buying to help you choose.

Leasing a car

Benefits to leasing a car include:

  • Often no down payment required (monthly payment may be higher with no down payment)
  • Lower maintenance and repair costs because the car is new and will still be under warranty for part, if not all, of the term
  • The ability to turn in the car and get another model, since the typical lease term is 3 years 
  • The ability to negotiate to buy the car at the end of the lease term and potentially obtain a lower monthly payment (learn more about auto lease buyout options).
  • There may be some cons to leasing. First, car leasing comes with mileage restrictions, usually 12,000 to 15,000 miles a year, according to Consumer Reports. You can negotiate to lease with a higher mileage limit, but your monthly payment may be more. If you go over the allotted mileage at the end of the term, you’ll pay a penalty, usually between 10 and 25 cents a mile.

Other potential cons:

  • If you terminate your lease early, you may be required to make all the payments and likely will pay an additional penalty.
  • You won’t own the car at the end of the lease term.
  • You may be charged a penalty if the car isn’t in excellent condition when you return it at the end of the term.

Buying a car

Perhaps the biggest advantage to buying a car is that you’ll have an asset. Once you pay the loan in full, you’ll own the car and that car can be used as a trade-in when you're ready to buy a new car. 

There are other pros to buying a car:

  • Buying a car does not have the mileage restrictions that leasing does.

On the con side, you’ll often need to make a down payment when buying a car, either with cash or a vehicle trade-in. Also, buying a car requires ongoing maintenance, and the longer you own a car, the more you’ll spend on parts, repairs, and upkeep. 

Leasing or buying a car: What’s right for you?

When deciding whether to buy or lease a car, consider which factors are most important to you: Do you want a lower monthly payment or no down payment? Do you drive lots of miles? Do you want an asset? Prioritizing what’s important can help you make the right decision.

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