Kylie Whitcomb Buy or lease? It’s the age-old question in the automotive world. Whether you buy your next Ford SUV or enter into the Kia lease you’ve been considering, you need to understand your finances.
In the long term, purchasing a vehicle will save you more, but lease agreements might have smaller monthly payments that are easier to manage. Lease agreements can come with competitive rates that help lower the overall cost of your monthly obligation, but buying helps you better plan for your auto payment obligations.
According to a report from MoneyGeek.com, in 2022, the average cost of a monthly lease payment was $540.22, as compared to the average $667 auto loan payment for a new car.
Not Ready to Commit? A Lease Might Be For You
Leasing has its own perks, with its biggest one being that you can get behind a great vehicle without having to commit. If you’re someone who’s not quite sure what the right vehicle is for your lifestyle, a lease allows you to swap out your ride every one or two years, depending on the agreement you choose.
Lease agreements let you try out new makes and models and are the best way to stay in the latest vehicle without having to pay that hefty price tag of a new ride.
Lease agreements can also be great for drivers who are in transitional stages of life. For example, the vehicle you drive when you don’t have children will be significantly different than the vehicle you need if you do plan to have kids. Lease agreements let you seamlessly move in and out of the vehicles to match the fluctuations of your life. If commitment scares you or you’re simply not ready for it, entering into a lease agreement might be for you.
Understand Lease Terms
While lease payments are lower and offer the convenience of flexibility, lease agreements are complex and have pretty strict regulations around them. It’s important that you understand your lease terms so that you can keep costs as low as possible.
A major factor to think about is your driving habits. All lease agreements have mileage limits that limit how many miles you can drive in a particular month. Going over that limit can mean more costs at the end of the lease.
It’s also important to understand your options at the end of the lease agreement and whether or not you’ll be able to buy out the vehicle, and at what price point.
Think Long Term
If you’re thinking long-term and are prioritizing saving and not so much having the latest vehicle, then buying might be best. You’ll have a lot more financial control when you purchase your vehicle as opposed to leasing it, even if you get an auto loan.
For example, being able to provide a sizable down payment and shopping around for a competitive rate allows you to determine exactly what your auto payment will be for the next couple of years. This level of control over your finances can allow you to plan for other important aspects of your life. If having the latest bells and whistles on your vehicle isn’t important to you, then purchasing your ride might be the best bet.
The Bottom Line
Overall, whether you buy your next Hyundai or enter into a Kia lease largely depends on your financial standing, what you want your auto payment to look like, and what you have planned for in the near and far future. With both buying and leasing, it’s important to plan, understand your finances, and assess your automotive needs to help you settle on the best option for your lifestyle.
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