NASHVILLE, Tenn. (WTVF) — When it's time for a new car, is it better to buy or lease? The experts at Consumer Reports are weighing the options so you can be better informed.
Buying or leasing can be a difficult decision, what with supply chain issues and rising interest rates.
The average price paid for a new car is nearly $50,000, and with higher interest rates above 6%, you’re likely looking at bigger monthly payments no matter which you choose.
Consumer Reports says on the surface leasing can be more appealing than buying.
“First, it’s always under warranty. Second, you’re always driving a car with the latest safety features. And third, if you’re working part time in the office and part time at home, you’re not driving as much. So that means you probably won’t exceed the lease’s limits on how many miles you can drive," said Jon Linkov with Consumer Reports.
Monthly payments are usually lower with a lease because you’re not paying for the full value of the car. That means you may be able to drive a more expensive vehicle than you’d normally be able to afford. While that might sound appealing, there’s one hard fact about leasing… at the end of the term, you’ll have to return the car because you don’t own it.
“A major downside of leasing is that you have an endless cycle of paying for a car. You’re never without a car payment because as soon as the one lease is up, you have to either buy a car or get into another lease,” Linkov said.
Consumer Reports found that it's difficult to make a fair head-to-head comparison, but in general, two back-to-back three-year leases will always cost more compared with buying and owning a car over that same period. Because the buyer owns an asset, the vehicle, after that period.
If you do choose to buy your next car, Consumer Reports says there are some easy ways to save.
Don’t rely on the dealer for the best loan rate. Instead, check if your bank or local credit unions offer lower rates. And, if your heart isn’t set on a specific make and model, shop around for financing incentives that might be offered by manufacturers.
And don't forget: even if you choose to lease, you should still negotiate the price of the car and the terms of the deal.
