Financial Planning Checklist: Should I Buy or Lease My Next Car?

One of the financial decisions you’re bound to make at some time is whether to buy or lease a car. There are pros and cons to each option that depend on your individual situation.

The Pros of Buying a Car

Buying offers several advantages, including control over the duration of ownership, discretion to use and customize the auto and the potential to protect the value of the asset – ultimately ending in selling or trading it in.

The Pros of Leasing a Car

Leasing offers a short-term commitment, warranty coverage and temporary use of a depreciable asset.

Here are some of the things you’ll want to consider when making the decision to buy or lease your next car:

• Do you want flexibility on how long you’ll keep the car?
• Do you drive a significant number of miles each year?
• Are you a business owner? Business owners may be able to deduct certain leasing and operation costs associated with the business use of their automobile.
• Do you want to minimize the immediate costs of depreciation?
• Do you want to minimize your purchase price?

The decision of whether to buy or lease can be a tough one, but this checklist can help provide clarity around which option is better for your unique situation.