Should you lease or should you buy? The analysis for this question is far different when determining whether you should rent or buy a house. The reason the analysis is different for a home is because a home is not traditionally a depreciating asset. On the other hand, the minute you drive a car off of the lot, it begins to depreciate. Nine times out of ten, it is better to buy a home instead of rent an apartment. However, this is not true when this decision needs to be made about a car.

There are many considerations to take into account when determining whether to lease or to buy. First, you have to consider how much driving you do. If you drive a lot (meaning you put more than 1,000 miles on your car per month) leasing a car may be a better choice because the car will sustain more wear and tear. This means that your car may not last as long as you want it to and, therefore, if you were to buy the car instead of leasing it, its usable life would not last as long. Additionally, if you are driving the car this much, you may experience more repair costs due to an expired warranty. Usually, under a lease, your car is completely covered under warranty and, therefore, your repair costs are nominal. Even though this may be true, many car manufacturers now offer ten year, 100,000 mile warranties. This pretty much covers the life of your car, and therefore, although the repair costs are a consideration, they do not hold as much weight as they used to.

In addition to mileage and repairs, money is always the primary consideration. Generally, leases are cheaper because your payments are based on the depreciation of the car, not the total value. However, under a lease, you payments never stop. Once one lease ends, you have to lease another car or buy the car you currently lease. Additionally, under a lease, you can never sell your car, because, you technically never own the car. Therefore, buying a car does offer some monetary advantages over a lease.

Many websites exist that provide financial calculators so that you can get a better monetary picture of the lease vs. buy debate. In my opinion, these calculators are to be used as a factor to consider and not as the end-all, be-all factor that determines your decision for you.

Take into account the many considerations and analyze which option (buying or leasing) is better for your financial situation, your working situation, and your driving situation.

Learn more about this author, Marco Angioni II.
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