Leasing VS Owning a Car

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March 11th, 2010

So, my friend and I usually get down to the pros and cons of leasing a car whenever the check engine light comes on. I have personally only owned cars, both new and used. And his family has both owned and leased their cars. Here I will be looking at some of the reasons why someone would lease a car or whether it would be best to own.

It’s not your problem. – Let’s just start with the largest pro for leasing a car, you’re not responsible for anything. Nothing is your responsibility, zip. If the O2 sensor needs replacing the dealer will take care of it, smashed up front end from an accident, then insurance will pay; never have to pay for any type of repair work. The only things that you, the lesssee, are responsible for is oil changes and filling up the tank with gas and enjoying the ride. All other maintenance is usually covered under your lease agreement. For the most part this is also true of buying a new car, for the first 30,000 miles or so you are also covered for any unexpected repairs that may come up. Any damage resulting from an accident will also be paid for the insurance company … as long as you get full coverage, which any reasonable person would get on a new vehicle. However, once the warranty runs out, that’s it, all future expenditures are yours and yours alone. You better hope by then you know a trustworthy and honest mechanic or you might get taken for quite the ride. Leasing – 1 / Owning – 0

What’s this going to cost me. – Next let’s discuss the monetary costs you’ll face. If you buy a car you will either be paying cash or you will have to take out an auto loan. Either way, that $24,000 car is costing you at least $24,000 if not 30k after the interest has compounded nicely. If you would like to lease a car you’ll still be spending a down payment, but you will only be paying for the value the car has depreciated in the time that you have had it + some additional fees and taxes. The monthly payments could be the same or a little less with the lease. Leasing – 2 / Owning – 0

I can’t do what?! – Leases are much more constrictive than actually owning a car. You can’t do any custom work to your car, this goes from changing out the lights for some HID bulbs all the way up to adding a supercharger. Regardless of the work you’re not allowed to do it with a leased car. It technically belongs to the dealer and you are only paying money to borrow it. Owning a car gives you all the rights and privileges associated therein. You can choose to change the paint of the car, have a spoiler added, or even add some neon lights. It is your car and you get to choose what to do with it. Leasing – 2 / Owning – 1

I didn’t know I’d have to pay for that. – A lease agreement may also have additional costs associated with it. If you plan on putting extra miles on the car that may cost you in the end, unless you pay for a higher mileage package up front. That car can be used for your day to day errands, but if you plan on driving cross country to visit those relatives you haven’t seen in a while then you may be getting into more than you bargained for. You may also have to pay for some expenses if it can be shown that you were negligent with other problems. If that check engine light came on and you waited 3 weeks to take it to the dealer then a simple $200 repair could have turned into a $1500 repair and you may get stuck paying the difference. Leasing – 2 / Owning – 2

What about down the line. – Now lets talk about the potential assets growth or loss. Let’s face it a car is an asset, just like real estate or a home. When you purchase a car you have just purchased an asset, but if you chose to lease that asset doesn’t belong to you. It is the car dealer’s asset that he is loaning out to you and at the end he will get it right back and loan out to another person … or chose to sell it. Being a car owner is just like being a home owner, you have all the cards and all the power. However, a house can always go up in value when a car begins to lose its value the second it is driven off the lot, so although the value is diminishing from the beginning, it is always yours. Leasing – 2 / Owning – 3

Time for a new car. – Another big plus that leasing allows is always allowing you to trade up for the newer model. When your lease is up then you can just return the car for the newest model, maybe a different color, maybe an all around different brand. If you decided that you’re done with Honda forever then you just return that Accord at the end of your three year lease and get yourself a nice Mitsubishi Eclipse. If you liked the Accord then you can return that 2007 for a brand new 2010 with that nice smelling leather and everything. When you own a car, it’s yours, and you’re stuck with it. If you want to get rid of it then you’ll have to sell it on your own or trade it in and potentially lose some money. Where leasing takes a lot of your freedoms away throughout the life of the lease, you make it back in the end when you get to drive a brand new car every three years or so. Leasing -3 / Owning – 3

So for the most part the case can still be made either way. It’s more of what you want at the time and what you may want in the future. Some people put different values in the points I made above. Where I gave everything 1 point and weighed them all equally, a different person may find that their lack of responsibility when it comes to repairs is by far the biggest pro and that reason alone is enough to make them lease a car. It’s up to you. What do you guys think?

Written by Partial Outcome