Buying vs Leasing a Vehicle 

The choice of buying versus leasing simply comes down to preference. Some may view one as “good” and another as “bad” however the key is being educated and deciding what fits your lifestyle better. 

Terms to Know 

  • Asset: property that is owned by a person, such as a vehicle 
  • Liability: obligation to pay back a sum of money that has been borrowed  
  • Lessor: the person owning an asset and leasing it to another 
  • Lessee: the person leasing an asset from the owner 

Individual Preferences 

Buying Leasing 
Keeps vehicle for several years Chooses to have a new vehicle every two to four years 
Has the funds available to put a down payment  Does not have the funds for a down payment 
Drives over 15,000 miles per year Will not drive over 12,000-15,000 miles per year 
Wants ownership of the vehicle Uses the auto for business 
Eventually wants to discontinue vehicle payments Needs lower monthly vehicle payment, willing to give up ownership for lower payment 

Additional Considerations of Leasing 

  • Terms of the Contract 
    • Annual mileage limit 
    • Vehicle warranty and covered repairs 
    • Additional insurance that you might not already have 
      • Original Equipment Manufacturer 
      • Gap Insurance
  • Business Vehicles 
    • Potential tax deductibility of principal and interest when leasing 
    • Lose tax deductibility of depreciating the asset 
  • Total Cost 
    • Compare the leasing cost to the cost of buying 

Whether you decide to buy or lease, make sure you know the details then make the best decision for you.