While buying has traditionally been more popular among buyers looking for long-term ownership, leasing offers perks like lower monthly payments. In fact, leasing accounts for roughly 30 percent of new car sales, demonstrating a major shift in purchasing habits over the past few decades. Whether you’d like to finance your next car purchase or lease a new vehicle, there are pros and cons to both buying and leasing.
Buying a car is ideal for those who have some money saved up and want to make a long-term investment. Most financers suggest you pay about 10 to 20 percent of the sticker price as a down payment, and monthly car payments tend to be slightly higher when you buy as opposed to lease. While initial costs might be higher, buying is typically a better investment in the long run because you own the car after you finish making payments.
For those looking to save money, you can also buy used and certified pre-owned cars. The average cost of a new car in 2018 in the US is about $36,000, which is often out of the price range of many car shoppers. However, used cars cost an average $19,400. Certified pre-owned cars provide some of the cost-saving benefits of buying used with added assurances thanks to rigorous inspections, added warranties, and other perks.
Leasing is much like renting long-term—you make low monthly payments, but you don’t invest equity in the vehicle. With the high costs of buying new, many Americans are turning to leasing as a cost-efficient way to get a reliable car. There’s less anxiety when you’re leasing because you don’t have to worry about being upside-down on a car loan, and you can often upgrade to a car that would normally be out of your price range.
The obvious down side to leasing is that you don’t get to keep the car when the lease is up. Some leases may also have mileage restrictions (e.g., 12,000 miles per year) to ensure you don’t add too much wear to the car, so keep that in mind before leasing if you travel a lot.
For more information about what option is best for you or your needs, contact the Finance Department here at Santa Cruz Nissan.