Leasing vs. Buying
Know the Pros and Cons of Each

Let's face it - more and more vehicles are getting pretty darn expensive. Due to this obvious trend some auto experts believe that in 20 years most people will be leasing. For those of you who are used to buying their cars - you may want to learn more about the option of leasing.

There are pros and cons to both sides. It really all depends on an individual's threshold for the each side's pitfalls. We've presented some questions that may determine whether you should be buying or leasing.

Do you get bored easily?

In other words do you wish someone would steal your car so that you can get something- anything -different to look at, smell and feel? Then leasing is for you! Leasing forces you to essentially "rent" your car for about 36-48 months. After that time you need to either turn in the keys or buy the vehicle - depending on your contract.

Do you despise the fact that your car payments will never end?

Then buy. Eventually you will pay off the car, your insurance rates can go down, and the car is yours. But with an older car you may start to hear those weird rattles, high-pitched whines and all sorts of red indicator lights flashing in your face. (Gee, I wonder what the exploding car icon means..). This leads us to our next question:

Do you detest repairs and maintenance issues? Then you better lease. Cars are usually too new in that instance to really show much breakdown.

Do you have lousy credit?

You may not have any other choice but to buy - and at a steep interest rate to be sure. We recommend buying the car outright in this instance - if of course you have the cash.....

Do you have champagne tastes but a beer budget?

Welcome to the wonderful world of leasing. Monthly payments are surprisingly low for that brand new Lexus you simply must have. The down payment can be low also - but again - only those with good credit need apply.

Do you tend to get a lot of dings, bumps, and scrapes - no matter how good you think you can drive? Do you drive fast distances?

Better to buy. There are a lot of penalties for "wear and tear" when you lease. There are also penalties with racking up a lot of miles. Generally the contract restricts you to 15,000 miles per year and then 15 cents a mile you go over that limit. Say, you just got back from that trip on Route 66? Could get pricey....

Do you hate being "upside down"?

This means your car is worth less than what you end up paying for it. Many people mistakenly believe they will build equity if they buy. A car is not like investing in a home – other than the payment structure is similar. In the first few years your monthly payments are going towards interest rather than principal. When purchasing a home that’s fine and dandy – but vehicles depreciate sometimes up to 40% - leaving you with little or no equity.

Leasing will never put you in that position. You have the car for a limited amount of time so you're only paying for the depreciation of the car during that time period.

Both sides can be good and bad. The question is - which one will allow you to sleep at night?