The Brainy Penny Should You Buy or Lease Your Next Car or Truck? – TheBrainyPenny

Should You Buy or Lease Your Next Car or Truck?


When it comes time to replace your beloved ride, be it car or truck, many people wonder whether they should lease or outright buy a new one?

This isn’t always an easy question since it has numerous variable factors. Buying your next car might be a good choice for some people, while leasing is definitely a better a deal for others.

How can you find out which works for you? Keep reading. We will break down the pros and cons of both buying and leasing, so you can feel confident that you are making the right choice for your circumstances.



Leasing a car will give you lower payments, which means that you can get a nicer set of wheels, but unless you pay off the balance (or refinance it) at the end of the term, is this really the best deal?

When you buy a car, you pay for the entire purchase upfront (or finance it). When it comes to leasing, however, you only pay for the negotiated price vs what the estimated value of the car will be at the end of the lease term. In essence, you are paying only for the depreciated value of the car.

The Pros of Leasing

  • Much lower monthly payment. Rather than paying for the entire sale price (for example $30K) you are only paying for the depreciation value (which could be $18K)
  • If you have kept to the lease agreement (such as staying within the mileage allowance) you can simply drop off the car when the lease is finished
  • Virtually no car repairs! Since most lease agreements are 3-year terms, your car should be covered under the manufacturer’s warranty. All you pay for would be maintenance items and some leases even cover those costs!
  • Smaller down payment. In fact, some dealers offer a no money down on car leases as an incentive. This will mean higher payments, but for those short on cash, this is an ideal situation
  • You can always have a new car with the latest technology
  • Depending on your state, you might get some hefty tax savings by leasing. Check with your tax professional to see if you qualify

The Cons of Leasing

  • Mileage restrictions. All leases have mileage restrictions. If you drive quite a bit, you might want to steer clear of a lease. Exceeding the mileage allowance (which is generally 15K per year) will cost you big bucks at the end of the lease
  • Excessive wear charges. This can be a tricky area. Dealers know that leased cars will have some wear and tear over the years, but if they believe the car shows excessive wear, you get dinged in the pocketbook pretty hard. Always keep receipts showing that you performed maintenance on the car. Read your lease carefully to be sure you know what is going to be considered “excessive”
  • No Equity. This means that when you return the car, you own nothing. You get no credit, even if you bring the car back in pristine condition well below the mileage limits.
  • You need excellent credit to lease a car or truck.
  • Restrictions on car use. If you plan on using the car for Uber or another ride share or delivery service, be sure the lease allows this


Buying a vehicle is as easy as it gets. You put up some cash or use your trade-in as a down payment, you get financing, or you cut the dealer a check.

The Pros of Buying

  • You build equity. As you make your payments, you build equity in the car. This means that when you have finished paying for it, the car is yours. You can sell it or trade it in or do what you like with it
  • No mileage restrictions. Drive that puppy around the world if you like!
  • You don’t need stellar credit. You might pay more interest if your credit isn’t perfect, but many people have no problem qualifying for a car loan
  • More expensive in the short run. You need cash or trade in for a down payment. You will also have to pay taxes, interest, (if you finance it), and your monthly payment will be higher. On the bright side, you build equity in the car
  • Long-term loans cost a lot more. Some dealers try to push longer loan terms, so you can qualify or to get the payments down, but this is a bad idea and will end up costing you even more down the road
  • Unknown depreciation amounts. It’s hard to tell what a car will be worth 5 or 6 years later. While a lease sets a price and it sticks even if the car is worth less later, if you buy a car, you might end up with a vehicle that is worth far less than you expected. Think Hummers. When gas is $2, people tend to buy bigger cars, but when gas jumps to $5? Those Humvee’s aren’t worth much because no one wants to pay for the gas it costs to run them

Look at your budget, your cash on hand, your trade-in, and your driving habits. You should be able to determine if leasing or buying is right for you once you consider all the variables in your life.

Tammy Robinson

Tammy Robinson

I am an extremely verbal person who excels (and profusely enjoys) writing and/or talking about anything and everything! I am retired now and living in beautiful Mexico. I love writing... Did I mention that?