‘Your Wallet’: Buying or leasing a car — what’s the best route?
LINCOLN, Neb. (KLKN) – So, you’re thinking about getting a new car. Should you lease or buy?
There are pros and cons to each.
Leasing pros
Scott Stream of Honda of Lincoln said that on average, you pay $100 to $150 less each month, compared with buying and financing a new car.
“Not only in the monthly payments but also in the up-front costs,” he said. “When you first lease the vehicle, you don’t pay sales tax. When you go down to the DMV, you just pay the registration fees, so you can save, depending on the vehicle, thousands of dollars up front.”
That’s because you’re not paying back any principal; you’re basically just borrowing the car and repaying the difference between its brand-new value and what’s it’s expected to be when the lease is over.
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Leasing cons
Some manufacturers require money down during the lease signing, and you better keep an eye on your mileage.
“The biggest con I’d say is you technically never own the vehicle ’cause you’re leasing it,” Stream said.
There are also mileage limitations, typically 10,000 to 15,000 miles a year.
And it can cost you if you go over the allotted miles. On average, you’ll pay 15 to 20 cents per mile.
So if you drive to Omaha every day for work or do a lot of traveling, leasing might not be for you.
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Buying pros
“The big part of it is the owning,” Stream said. “Whether you pay cash up front or take out a loan, at some point, you own that vehicle, and no more payments.”
Plus, with buying a car, you can drive as many miles as you want, but that will likely have an impact on the value of your car if you ever want to sell or trade it in.
Buying cons
Again, you’ll have to pay taxes when you buy it and, like leasing, you may have to put some money down before taking it off the lot.
Your loan payments are usually higher because you’re paying off the entire purchase. And the longer you own it, the more likely things start breaking down.
“It gets to the point you start putting money into it with repairs,” Stream said.
More things to know
Many times, you need a pretty good credit rating to lease or to get favorable financing.
If you are leasing, try to keep the car in good shape because any excess wear and tear may cost you more after your lease is up.
And while some manufactures have an end-of-lease cost, you can also opt to buy the car for its remaining value.
So before you get the keys to your new vehicle, do a little research and find out what option is best for you and your family.
Editor’s note: This report is part of a weekly series Channel 8 is airing called “Your Wallet.” We’ll be looking into any topics that deal with your money. The reports air every Monday during the Channel 8 News at 6 p.m.
