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What should be considered in buying or leasing a new car

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What concepts should be considered when buying or leasing a new car?

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Solution Summary

The 585 word solution presents a comprehensive view of buying versus leasing including personal choices and financial choices. It compares the two options, not only at the front of the transaction, but over the life.

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The decision about whether to lease or buy a vehicle probably hinges on two main topics:

1. Personal attitudes about lifestyle, change, ownership, debt
2. The money part of the deal, both up-front costs and monthly commitment.

Before discussing these, it should be clear that the differences in a lease and a purchase are that when you lease, you pay for a partial cost of the vehicle (part of its useful life). The monthly payment consists of interest and depreciation. You pay the leasing company for the part of the vehicle you use up, and you pay them interest for the capital they invested in the vehicle. When you purchase, you pay principal and interest for the asset, not the partial use of it. You will purchase it regardless of mileage, use, or term of ownership. Yes, there is depreciation inherent in the ...

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