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Leasing vs. Buying a Car: The Pros and Cons

In Auto Advice
Smiling person looking out a car window

When you’re ready to buy your first car or upgrade your ride, one of the first things you’ll have to decide is whether you want to lease a vehicle or buy one outright.

There are a few different considerations that go into deciding which option is right for you. Keep reading to learn more about the pros and cons of leasing vs. buying a car.

Leasing Pros

There are certainly some pros to leasing a car, including car selection and payment levels.

Access to New Vehicles

For those who like to switch out their cars often and enjoy being able to upgrade to the latest and greatest thing every few years, a lease may be the perfect way to get into the vehicle you want.

Driving late-model vehicles means that you can drive the car during its most trouble-free years and are likely also covered by the warranty the entire time you have the vehicle. You’ll have the latest safety features, technology, and other new car perks.

Lower Down Payment & Monthly Payments

Leasing a car typically results in a lower monthly payment than financing the purchase of a vehicle. In addition, the required down payment to drive off the lot is usually lower with a lease. This also allows many consumers to afford a more expensive car than they would be able to get through purchasing a vehicle upfront.

Maintenance & Warranty Coverage

Typically, all maintenance and even some repairs of leased vehicles are covered by the dealership for the duration of the lease. At the very least, regular oil changes should be included in your contract while you have the vehicle.

In addition, most leased cars will remain under warranty during the lease period, meaning that any necessary repairs are covered by the dealership or manufacturer.

Leasing Cons

Leasing a car isn’t the perfect fit for everyone. There are some negative aspects to leasing as well.

Higher Cost Overall

In general, it costs more to lease a vehicle than it would simply to buy it outright. This is especially true if you plan on buying the car at the end of your lease anyway.

Leasing may cost more because you will keep making lease payments without ever actually owning the vehicle, eventually trading in your lease for another car, or choosing to convert your lease to a sale. You will not accumulate any equity with a lease, making it a less wise financial decision for many consumers.

Mileage Restrictions

One of the biggest things to consider when it comes to leasing is how many miles you will need to purchase for your vehicle lease. If you go over the number of miles agreed upon in your contract, you will have to pay extra to the dealership for those miles. If you are someone who racks up the miles, a lease may not make the most financial sense for you.

Fees & Charges

When you lease a vehicle, there are some fees and charges that go into the process. In addition to the aforementioned mileage overage charges, you will have to account for other potential costs such as wear-and-tear charges, lease initiation fees, and early termination penalties.

Buying Pros

Most people would love to buy a new car right off the lot. And there are some perks to doing just that.

Ownership of an Asset

With a lease, you are paying only for the use of the vehicle during the lease period. When you purchase a car, that asset then becomes 100% yours once the lien is paid off. Owning your car allows you to build equity in the vehicle as you make your monthly payments. Your car then becomes a valuable asset that can be sold or traded at any time for financial gain.


Owning your vehicle also brings you greater flexibility. If you want to change your car, you can do so at any time without having to worry about returning your leased vehicle or paying early termination fees.

You also don’t need to be concerned with how many miles you are driving or if you are going to have to pay wear-and-tear charges for any damage done to the vehicle. In addition, you can modify or customize your vehicle however you would like. Many consumers prefer to have this kind of flexibility than deal with the hassles of leasing a car.

Buying Cons

Buying a car outright is not without a downside. There are some cons you need to consider.

Higher Upfront Cost

The required down payment for vehicle financing is typically higher than with an automotive lease. However, the more you can pay upfront for your vehicle, the lower your monthly principal and interest payments will be, saving you money in the long run.

Higher Monthly Payments

In addition to shelling out more upfront for your vehicle, a car that you purchase will likely have a higher monthly payment than a car that you lease. This is because vehicle leases only finance the amount of expected depreciation plus interest and fees, while a car purchase will result in financing the entire amount of the vehicle’s value.


When you own your vehicle, you are typically on the hook for all repairs and maintenance. Although your warranty may include some basic services, such as oil changes, you won’t get as much ongoing coverage with a purchase as you would with a leased vehicle. In addition, if you are buying a preowned vehicle, your car may not come with any warranty at all.


When you finance a vehicle, you are unfortunately subject to the depreciation in value that occurs as soon as you drive it off the lot. This can lead to you being upside down in your loan for some time, meaning that you owe more on the vehicle than it is worth.

Leasing vs. Buying: What Is Right for You?

For most consumers, buying a car rather than leasing one is the smarter financial decision. Unless you strongly prefer to drive a newer vehicle that you can switch out every few years, the downsides of a lease typically outweigh the benefits. With the right financing deal, a vehicle purchase can even be a great asset to your financial future.

At 1st Advantage Federal Credit Union, our members enjoy low-interest rates, minimal fees, personal service, and a variety of auto loan financial products, including GAP insurance and extended warranties.

Visit our affordability calculator below to figure out how much car you can afford and get started on the loan process today.

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