Owning or Owing: Is Leasing a Car Better Than Buying in 2022?

Many think that there’s never been a worse time in their lives to get a new car. Rising inflation, remote versus in-person work changes, concern about disease spread, and more make up a lot of people’s troubles in 2022. Buying a car may be the least of your worries right now, but maybe it should be higher up on the list.

The pandemic has changed a lot of things, including the automotive industry, in unexpected ways. Now may be the time to invest in or find good lease deals for a new car. But how do you know which is the best route to take?

Here are the primary advantages and disadvantages of leasing versus buying a new vehicle, and which is the better option for you.

Advantages of Leasing a New Car

The increased popularity of leasing vehicles has allowed many to see the unique benefits of the practice.

Renting a Vehicle

Leasing a car can be compared to renting and has the same benefits as renting a home. You only commit to owning and taking care of the car for a few years and have the freedom to decide if you want to keep leasing the car or move on to a new one after the contract ends.

You also don’t have to worry about depreciation and the trade-in or resale value of a leased vehicle.

Saving Money

Despite what many would tell you, you can actually save money leasing a car! It’s cheaper than buying with a loan due to interest rates and other fees for purchase. There are often lease deals that reduce your monthly cost or provide additional maintenance services for free, putting more money in your pocket.

Business owners can also get tax deductions for leased vehicles that they may not otherwise be able to have.

The Disadvantages of Leasing

Despite the positives that have been found in leasing vehicles, the reasons it used to be an unpopular practice still remain. Here are the most important ones.

Strict Contracts

When you lease a car, you sign a contract that specifies more than just how long you’ll have the vehicle and how much you’ll pay for it. A big part of a leasing contract is stipulations on mileage – usually, no more than 12,000 – and what wear and tear conditions are acceptable.

There are also clauses for breaking the lease early, what modifications can and cannot be made, and vehicle return fees. This can feel restrictive for someone used to purchasing a car and being able to do what they want with it.

Long-Term Money Drain

While you save on monthly payments compared to purchasing with a loan, leasing has a lot of fees that can rack up quickly. Leasing and return fees, specific maintenance costs like tire replacement, and early return penalties can make the same car cost thousands more as a rented vehicle compared to an owned one.

There’s also the long-term cost; leasing a new car every two years can cost far more than buying a new one up front and keeping it for ten years. This is because you’re always renting a car in its prime when it costs the most. No lease deals can make up for that added cost.

Advantages of Buying a New Car

Buying a car is the traditional choice with some obvious advantages that are important to remember when considering which method of car ownership is best for you.

Owning a Car

Buying a car means you own it completely – provided you’ve finished paying it off. This means you decide whether you’re keeping or selling the vehicle and get to retain any money from the sale.

You don’t have to worry about mileage, customization, and the parts used for repairs and maintenance the way you do with a leased car.

Long-Term Cost Benefits

While you can save money in the short term, the total monetary benefit of buying a car comes in the long-term cost. You pay more to own a car than to lease one, but if you keep your purchased car in good shape, it lasts longer and is worth more than any lease deal or contract.

The Disadvantages of Buying

While owning a car is an attractive concept, it comes with some intense downsides in practice.

Up Front and Full Ownership Cost

To buy a new car, you have to either have the cash in hand or be able to take out and pay back a loan over time. Interest rates on loans mean you end up paying back more than you originally owed, driving up the cost of your car.

In addition, you have to maintain the car yourself – paying taxes, registration, maintenance, and repairs can cost a lot. Owning a vehicle means taking care of it yourself, whereas leasing might have been easier and cheaper.

Keeping an Eye on the Market

Buying a car also means that you’ll eventually have to sell it. If you want any money back or a valuable trade-in, you need to keep an eye on your vehicle’s depreciation and do what you can to keep it in good shape.

This could mean anything from costly repairs to making sure to keep your mileage low.

Knowing Which Option is the Best for You

Now that you know the main pros and cons of buying versus leasing a new car, it comes down to deciding which method is the best for your situation.

Ask yourself a few questions about what you want a car for and your financial situation. Do you need a vehicle for more than two years? Is your financial situation going to change any time soon? Do you have savings or need to save money? Do you value having the best and most modern technology in your vehicle? Do you want to make an investment for your future? Are loan terms or lease deals more beneficial for you?

By answering these questions and researching with the help of your local dealerships, you can decide whether buying or leasing a car is the best option for you in 2022.