Lease versus buy? Let’s simplify the answers and summarize them here:
1. The short-term monthly cost of leasing is ALWAYS SIGNIFICANTLY LESS than the cost of buying.
For the same car, same price, same term, and same down payment, monthly lease payments will always be 30%-60% lower than loan payments. This is still true even when compared to 0% or low-interest loans.
2. The medium-term cost of leasing is ABOUT THE SAME as the cost of buying, assuming the buyer sells/trades his vehicle at loan-end and the leaser returns her vehicle at lease-end.
The overall cost of leasing compared to buying, over the same lease/loan term, is approximately the same, more or less, assuming the buyer sells the vehicle at the end of the loan. Comparisons sometimes show buying to cost a little less than leasing due to fewer fees, lower total finance costs, and the assumption that a purchased vehicle will return full market value if it is sold or traded at the end of the loan (often a bad assumption, especially if traded). However, when the benefits of wisely investing monthly lease savings are considered, the net cost of leasing can easily be less than buying.
3. The long-term cost of leasing is ALWAYS MORE than the cost of buying, assuming the buyer keeps his vehicle for years after loan-end.
If a buyer keeps his car after the loan has been paid off and drives it for many more years, the cost is spread over a longer term. It doesn’t take rocket science to figure out that the cost of buying one car and driving it for ten years is less expensive than leasing or buying five different cars over the same period. Therefore, short-term leasing is always more expensive that long-term buying. If long-term financial cost savings were the most important objective in acquiring a new car, it would always be best to buy the car and drive it for as long as it survives — or until the cost of maintenance and repairs begins to exceed the cost of replacing it. However, many automotive consumers have other objectives that reduce the importance of long-term cost savings.
So, which is better, lease or buy?
It depends on what’s most important to you. We all have different priorities and ideas of what we can live with in vehicles. Your lease vs. buy decision must be based on your own priorities.
If you enjoy driving a new vehicle every three to four years, need lower payments, like having a vehicle that is covered under a manufacturers warranty, do not have a priority in owning a vehicle, accept a car payment as one would accept paying for cable or a telephone, you should probably lease.
If you can handle higher monthly payments, wish to heavily modify your Jeep or use it extensively on severe off road conditions, want to own your Jeep, and see an end to monthly payments, you should probably buy. I could imagine the dealer if you returned a Jeep mutilated by trail carnage.
