Leasing vs. buying
Consider how often you want a new car, how much you actually drive and whether or not you use your car for business. Here’s a quick rundown to keep in mind when deciding between leasing or buying a car.
Low down payments
The more cash you have for a down payment, the lower your monthly payments. A lot of advertised lease deals assume a down payment, but you can often get the dealer to limit it just by asking.
Low monthly payments
With a lease, you are only paying off the depreciation on the car, so your monthly payments will be much lower than if you opt to finance the purchase over the same period of time.
Assuming your car is in good shape at the end of your lease, you just hand over the keys and choose a brand new car with a new lease arrangement. You don't have to sell the car or haggle over trade-in value. (Termination fee may apply.)
Like paying rent on an apartment, your lease payments don't go toward ownership unless you choose to purchase your vehicle during or at the end of your lease.
Lack of flexibility
If you want to end your lease before the full term, you will incur an early termination penalty. Early termination could cost up to 2.5 months’ worth of payments. Additionally, you could be responsible for much more than that, depending on the value of the vehicle.
Mileage cap and damages
Usually a lease agreement grants 10,000 to 15,000 miles per year and most leases charge an extra 25 cents for each mile over the limit. You also pay for any damage to the car beyond minor wear when you turn it in.