Car Buying vs. Leasing

If you plan to keep your car for a long time, buying is often the best choice. But if you’re short on cash or don’t plan to own a car for many years, sometimes leasing is smarter. (Monthly lease payments tend to be smaller than if you buy a car.) If there’s much chance that you'll damage the vehicle (not so unlikely, with a truck), you might get socked with extra charges when you lease — after all, vehicles coming off leases are later sold. If your credit rating isn’t too hot, buying might be best, since good credit is often required for leases. With buying, it's often not as big of a deal.

When you buy a car, you pay for its entire cost. You generally make a down payment or have a trade-in, and you pay sales tax up front or roll it into your loan.

When you lease a vehicle, you pay for only a portion of the car’s cost — the amount it depreciates during the time you’re leasing it. You have the option of not making a down payment, paying sales tax only on your monthly payments (in most states) and paying a money factor that’s similar to an interest rate on a loan. You may also pay extra fees and possibly a security deposit. At the end of the lease term, you must return the car.