Whether to lease or buy a car? Each has pros, cons

It’s time for a new car! You know the color, make and model that you want and already have images of road trips with the top down and your hair blowing in the wind.

Now the tough question: Should you lease or should you buy? Each option has its pros and cons. Here is some basic information from car experts to help you make your decision.

Ownership

Buy: You reap the financial benefit of owning something and can keep it until you sell or trade it in.

Lease: You do not own the vehicle. You have to return it at the end of the lease, which typically lasts three to four years. Most leases indicate a purchase option.

The Car

Buy: You are paying for the full cost of the vehicle, so you must have the financial means to pay off the loan.

Lease: You can drive a car beyond your financial means because you’ll have a lower monthly payment than if you took out a loan.

Monthly Payments

Buy: You are paying for the vehicle’s cost, interest and other fees, no matter how many miles you drive it. Monthly loan payments are higher than monthly lease payments.

Lease: You pay for the vehicle’s depreciation during the lease, interest and other fees. Monthly lease payments are lower than loan payments. You can put down as much or as little of a down payment as you’d like. But don’t put down too much: Leasing’s low rates make it more advantageous to keep your money in the bank.

Mileage

Buy: You can drive as many miles as you want, but higher mileage impacts a vehicle’s value and can result in frequent repairs and scheduled maintenance visits.

Lease: If you don’t drive a lot, leasing may be your best option since most leases limit the number of miles you can drive (10,000 to 15,000 miles per year). To get a higher mileage limit, you’ll have to pay more each month. (It’s typically cheaper to pay for miles upfront rather than at the end.) In turn, you’ll likely have more maintenance costs on your car. You also might get partially refunded for any unused miles when returning the car after its lease is up.

Repairs

Buy: Make any upgrades or changes to the car that you’d like, but you are responsible for footing the cost of any major repairs.

Lease: If you lease the car for the length of the manufacturer’s warranty, you won’t have to pay for major repairs. On the flip side, since you don’t own the car, you can’t make any changes such as upgrading equipment or painting the exterior.

End of Term

Buy: At the end of your loan, you have no more payments. If you terminate the loan early, you’re responsible for any payoff. To get another car, you may have to sell or trade in your current one.

Lease: You have to pay any end-of-lease costs, buy a new car, or lease a new car. If you end the lease early, you’ll suffer penalty fees. You may be responsible for excessive wear, such as worn tires, when you return the vehicle. Look for disclaimers in your lease.