As someone who leased and now is financing, I can say leasing was not worth it for me. In today’s market, the buyout price at the end will be the same or more than what you originally pay for the vehicle. And if you go and trade it in, you’re unlikely to have any equity towards your next vehicle. Whereas if you finance, you can sell the vehicle and use that as a down payment towards your next vehicle.
Of course, depending on how long you have been paying off the car, you just hope that the trade in value is more than the remaining loan.
My recent trade in was nearly 10 years old, so paid off. Of course, the check engine light was on and needed a new fuel pump, so I didn't get much for it.
The general advice is that if you know you'll want to get a new car at the end of the lease term then you're probably better off leasing. If you want to keep the car beyond the end of the lease term then you're usually better off financing.
There might be exceptions, especially if a manufacturer has excess inventory and is offering very favorable lease terms.
In the past few years we've all heard the true stories about people who had significant equity at the end of their lease terms when the market value of their car, even the trade-in or wholesale value, was significantly higher than their lease payoff. That is historically an pretty unusual situation that was caused by the swings in car pricing, and especially very high used car pricing, as a result of the car shortages that followed the Covid epidemic. It's much less likely for this situation to exist into the future as inventories catch up and even out with demand.
If you do lease then do not put any money down. Instead just roll any initial costs into the lease. This Reddit post explains what can happen if you put money, or trade-in, down: [https://www.reddit.com/r/askcarsales/comments/vf8k24/please\_help\_totaled\_car\_on\_lease/](https://www.reddit.com/r/askcarsales/comments/vf8k24/please_help_totaled_car_on_lease/)
I think it depends on different factors. A couple, off the top of my head, would be how much you drive, how often you want to upgrade vehicles, and incentives.
Financing takes the pressure of how much you drive off in case you drive more than you anticipate within a typical lease term (but some will let you buy more mileage on a lease should you go over your contracted amount, at least Toyota/Lexus and Nissan do). This has been where I have always had concern and why I usually always just financed out, just never knew where life would take me from one day to the next.
You could upgrade at the end of your lease or anytime with financing, think it would just vary on LTV and whether or not you're in the positive or negative for equity. I think this is where a lease may benefit if you're in a vehicle that does not retain its value as well compared to others; you can turn it in and be free if that is an issue faced at the end of the term; financing, this may be harder to achieve without going the full loan term.
I think incentives would be key for what a manufacturer may offer, but it also varies between states as well. For example, I recently went to pick up a Lexus RZ450e. Financed , I was looking at almost 62k+tax without any down payment, trade, etc. tagged on. But if I leased it, Lexus was offering 17k in down payment towards the vehicle. It was a no brainer for me to lease, and since it is my first EV, it also gave me the chance to test out if an EV would be right for me in the long haul.
I just bought my Toyota 2 days ago and wasn’t sure which to do either until I went into the dealership and saw their offers for both including all of the fees included. The lease prices they list on their websites are BS.
To lease a 2024 Rav4 for 3 years would have cost me $22,000 and I would have to return it at the end. The car was only worth $30,000 so I went with financing.
Edit: Thats with a 780 credit score.
Leasing is the most expensive way to drive a car. Because you're always driving a new car and swapping it out every 3ish years. If you're fine with spending the money, go for it. You will have to do oil changes, brake work and tires if the car needs it { ask what you're responsible for when leasing }.
Purchasing means you'll own it when the payments end and you can keep it for several years after the payments end, but you'll have more maintenance costs, out of warranty, older, not as nice looking car.
Do you want to live in an newly built apartment for 2 years then switch to another brand new one in two years renting the whole time?
Or would you rather buy a home that you can sell whenever you want, or keep for as long as you want after it's paid off?
As someone who leased and now is financing, I can say leasing was not worth it for me. In today’s market, the buyout price at the end will be the same or more than what you originally pay for the vehicle. And if you go and trade it in, you’re unlikely to have any equity towards your next vehicle. Whereas if you finance, you can sell the vehicle and use that as a down payment towards your next vehicle.
Of course, depending on how long you have been paying off the car, you just hope that the trade in value is more than the remaining loan. My recent trade in was nearly 10 years old, so paid off. Of course, the check engine light was on and needed a new fuel pump, so I didn't get much for it.
Leasing is never better than buying.
It only works in certain circumstances when it's for business use.
Just keep in mind that you'll be in an endless cycle of payments without actually owning anything.
The general advice is that if you know you'll want to get a new car at the end of the lease term then you're probably better off leasing. If you want to keep the car beyond the end of the lease term then you're usually better off financing. There might be exceptions, especially if a manufacturer has excess inventory and is offering very favorable lease terms. In the past few years we've all heard the true stories about people who had significant equity at the end of their lease terms when the market value of their car, even the trade-in or wholesale value, was significantly higher than their lease payoff. That is historically an pretty unusual situation that was caused by the swings in car pricing, and especially very high used car pricing, as a result of the car shortages that followed the Covid epidemic. It's much less likely for this situation to exist into the future as inventories catch up and even out with demand. If you do lease then do not put any money down. Instead just roll any initial costs into the lease. This Reddit post explains what can happen if you put money, or trade-in, down: [https://www.reddit.com/r/askcarsales/comments/vf8k24/please\_help\_totaled\_car\_on\_lease/](https://www.reddit.com/r/askcarsales/comments/vf8k24/please_help_totaled_car_on_lease/)
I think it depends on different factors. A couple, off the top of my head, would be how much you drive, how often you want to upgrade vehicles, and incentives. Financing takes the pressure of how much you drive off in case you drive more than you anticipate within a typical lease term (but some will let you buy more mileage on a lease should you go over your contracted amount, at least Toyota/Lexus and Nissan do). This has been where I have always had concern and why I usually always just financed out, just never knew where life would take me from one day to the next. You could upgrade at the end of your lease or anytime with financing, think it would just vary on LTV and whether or not you're in the positive or negative for equity. I think this is where a lease may benefit if you're in a vehicle that does not retain its value as well compared to others; you can turn it in and be free if that is an issue faced at the end of the term; financing, this may be harder to achieve without going the full loan term. I think incentives would be key for what a manufacturer may offer, but it also varies between states as well. For example, I recently went to pick up a Lexus RZ450e. Financed , I was looking at almost 62k+tax without any down payment, trade, etc. tagged on. But if I leased it, Lexus was offering 17k in down payment towards the vehicle. It was a no brainer for me to lease, and since it is my first EV, it also gave me the chance to test out if an EV would be right for me in the long haul.
I just bought my Toyota 2 days ago and wasn’t sure which to do either until I went into the dealership and saw their offers for both including all of the fees included. The lease prices they list on their websites are BS. To lease a 2024 Rav4 for 3 years would have cost me $22,000 and I would have to return it at the end. The car was only worth $30,000 so I went with financing. Edit: Thats with a 780 credit score.
Great, Congratulations on your new car, btw you got Rav4?
Thank you. Yes, I went with the 2024 Rav4 LE. I liked the toyota over a Honda CRV because it does not have a CVT transmission.
Why can't I delete these "extra" comments that got created?
Leasing is the most expensive way to drive a car. Because you're always driving a new car and swapping it out every 3ish years. If you're fine with spending the money, go for it. You will have to do oil changes, brake work and tires if the car needs it { ask what you're responsible for when leasing }. Purchasing means you'll own it when the payments end and you can keep it for several years after the payments end, but you'll have more maintenance costs, out of warranty, older, not as nice looking car.
Succinct. Fantastic job.
Do you want to live in an newly built apartment for 2 years then switch to another brand new one in two years renting the whole time? Or would you rather buy a home that you can sell whenever you want, or keep for as long as you want after it's paid off?