GREENSBORO, N.C. — When it’s time for a new car, the choice between buying or leasing can be a tough call, especially with persistent supply chain issues and rising interest rates. So how do you know if leasing or buying makes the most sense? Consumer Reports has some tips for deciding which option will get you in the driver’s seat with the best deal.
Deciding whether to buy or lease your next car can be a tough decision. And with today’s higher car prices—the average price paid for a new car is nearly $50,000—and higher interest rates—above 6%—you’re looking at bigger monthly payments no matter which you choose.
Consumer Reports says that on the surface, leasing can be more appealing than buying. First, the vehicle is always under warranty. Second, you’re always driving a car with the latest safety features. And third, if you’re working part-time in the office and part-time at home, you’re not driving as much, so that means you probably won’t exceed the lease’s limits on how many miles you can drive.
Monthly payments are usually lower with a lease because you’re not paying for the full value of the car. That means you may be able to drive a more expensive vehicle than you’d normally be able to afford. While all of that might sound appealing, there’s one hard fact about leasing: At the end of the term, you’ll have to return the car because you don’t own it.
Another major downside of leasing is that you’ll have an endless cycle of paying for a car. You’ll never be without a car payment because as soon as your lease is up, you’ll have to either buy a car or get into another lease.
It’s difficult to make a fair head-to-head comparison, but in general, two back-to-back three-year leases will always cost more compared with buying and owning a car over that same period. That’s because you’ll own an asset—the vehicle—after that period.
If you do choose to buy your next car, CR says there are some easy ways to save.
Don’t rely on a dealer for the best loan rate. Instead, check to see if your bank or local credit unions offer lower rates.
If your heart isn’t set on a specific make and model, shop around for financing incentives that might be offered by manufacturers.
And don’t forget: Even if you choose to lease, you should still negotiate the price of the car and the terms of the deal.