Buying vs. Leasing New Cars

New Car

There is an age-old dilemma for car buyers that pit buying a new car against simply leasing a new car.  Whether you buy or lease, the right decision will depend on your financial situation and your expectations, personal preferences and uses for the new car. The vast majority of car owners purchase new cars; while the leasing market currently accounts for about 20% of the market. From the statistics it would seem that buying a new car is more often chosen, but it does not always make it the right choice for every situation. 

New Car Buying a New Car

For the average American buying a new car can be quite an ordeal. Financial studies have also proven that most new car buyers tend to overspend on their purchase. The depreciation on most new cars as soon as they are driven off the lot can be as much as 15%, with the average vehicle losing almost 20% by the end of the first year. However, most buyers own title to the vehicle in as little as five years, meaning that you own the property and then do not have monthly payments.

For consumers that can afford new vehicles and plan on driving them a minimum of 10 years, buying a new car can be a smart choice financially. However if you plan on purchasing a new vehicle every five years plan on recouping only around 30% upon trade-in or resale of the original purchase price. If you are consumer that likes new cars and plan on purchasing one every five years and have the financial means to do so than leasing may be a better option.

Leasing a New Car

If you plan on releasing a new car there are pros and cons for this decision as well. If you have the financial means to be able to purchase a new car every five years than leasing often is a better option with less hassle and lower costs.

If you do not want to have to deal with maintaining a vehicle, repairing it and having downtime while it is repaired in its later life stages than leasing is an option. For those individuals that prefer to always have a well-maintained and newer vehicle leasing is the way to go.

Monthly payments are generally cheaper than a financed new car over a five year term as well is there is usually either no or a small down payment on leased vehicles. At the end of the lease term a can be returned and a new one least again always enabling the consumer to have the latest model and the newest vehicle.

The largest drawback to leasing is that you will never own the vehicle and will always pay a monthly payment. Many financial studies have also been done on leasing and over the long term it is generally more expensive than purchasing a new vehicle and owning it for 10 years.

Trade-In or Resale

Another decision many vehicle owners face is whether to trade-in their old vehicle or try to resell it. Generally dealerships do not give as good of a value for trade-ins as you would normally get in a private sale. Yet in a private sale there are legal obligations as the seller which can lead to hassles and headaches.

Most vehicle owners that have held their vehicles for longer than 10 years, where the value of the vehicle is less than $1000, should also consider donating their vehicle to charity. As a legal tax write off, this option can bring the satisfaction of helping others in obtaining a tax benefit as well. Ensure that you donate your vehicle to a bona fide 501(c)(3) nonprofit and avoid scams by doing effective research first.

As you can see from this article the debate between purchasing a new vehicle or leasing it depends on your own personal preferences and financial situation. Generally the advice is for those people in lower economic brackets to buy used vehicles, those in the middle income bracket to purchase new vehicles, finance and hold them for 10 years, those in the upper tier income brackets can lease, well most of the very wealthy purchase their cars out right. In most of these situations, when you are done with your current vehicle, donating it to a registered car donation charity is a great idea.

‘Written by Loretta Stein of Goodwill Car Donations, helping you donate your vehicle to Goodwills across the country.


Shital regularly contributes to current health articles and healthy living ideas to health blogs around the web. When she’s not busy working with the jobs, you will find her undertaking many of her own health-related topics and healthy living ideas! She has a lot of dreams. She works hard to fulfill her dreams. She loves to share her ideas, tricks, tips, and information by blogging. She also works at, a company that committed to helping businesses with online marketing.

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