Pros and cons of buying vs leasing a car

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Now that the new year is finally here, we will start seeing more and more ads to buy the latest model of every single car available. Getting a car is an important transaction that will give you the freedom to go wherever you want, whether it’s a road trip with friends, running errands without carrying your bags on public transportation, or simply not having to take the bus to go to work. However, should you buy or lease a car? There are many ways to look at it. Some will prefer always having a new car, while others will use the same car as long as it works. Let’s see the pros and cons of buying vs leasing a car.

A bit of back story

I got my first car in 2007, a red 1992 Mazda Protege, when I was about 19 years old. This new ride cost me $1,800 (and probably $5,000 on repairs). I ended up selling it for $1,300 and settled to take the bus for a while.

A few years later, I bought another used car, a 2005 Pontiac Sunfire, for $3,000. It was a great car but my ex and I got rid of it to get an SUV because we wanted kids.

We ended up buying a brand-new 2013 Mitsubishi RVR for $36,000 (there were probably taxes, I’m not sure). It took us a bit over 5 years to pay it off entirely.

I still own this car and I’m going to keep it until… I’m not exactly sure until when, to be honest! Let’s just say that as long as it does the job, I’m going to keep it.

Pros and cons of buying vs leasing a brand-new car in a nutshell

	Buying	Leasing
Pros	– Once the car is fully paid for, it’s yours – In perfect shape when you get it – Recalls reparations are usually free – Warranty	– Brand new car every 2-4 years – In perfect shape when you get it – Recalls reparations are usually free – Smaller monthly installments – Warranty – You can enjoy the brand-new gadgets on newer models – Less money spent on repairs because the car is new – Fewer worries about what part could break
Cons	– A brand-new car is expensive – Higher monthly installments – Over the years, you need to invest more and more for repairs – When you leave the auto dealer, your car loses a lot of monetary value	– There’s a limit of kilometers or miles during your leasing contract (if you go over that limit, you will be charged) – You are constantly paying for it (wanna pay $400+ per month for the rest of your life?) – The car is never yours

Buying a brand-new car

When you buy a new vehicle, you usually have a manufacturer’s warranty that comes with it. Plus, it has no mileage, which means that other than regular maintenance, you won’t need to spend thousands of dollars on repairs. Most car dealerships also offer a warranty for a few months should something happen.

On the other hand, once you leave the dealership with your brand-new car, it immediately loses some value. I’m not exactly sure of the percentage but if you decide to sell your car the next day, you wouldn’t be able to get the price you just paid.

From that perspective, a car is definitely not an investment (other than the time you will save compared to using public transportation).

Also, over the years, the car may cost more to insure or have fewer coverages available, especially if you filed several car claims.

However, once the car is paid for, it is entirely yours. Trust me, this is a great feeling! I finished paying it 2 years ago and it feels great to not have a car loan anymore.

Leasing a brand-new car

If you never want to think about major car repairs, this is the option for you. That feeling of having a brand-new car is something a lot of people like (and that new car smell, am I right?).

Leasing a car means that you will change it every 2-4 years, depending on your leasing contract. So you will have a brand-new vehicle after only a few years.

Honestly, from a financial point of view, I just don’t think this option is great. I am definitely not judging, don’t get me wrong! But to me, the idea of having a car payment forever is just not viable.

For some people, it could be important to show up in a new car, like when you have to meet clients. In my case, I work from home, don’t deal with clients, and sometimes forget to shower, so having a brand-new car is not essential.

My parents did lease cars for years and I was still able to go to college (we weren’t rich but my parents were able to budget it until it didn’t make sense to them anymore). It really depends on your priorities.

Other option: buying a used car

At some point, in a few years, I will need to buy a car. Someday, mine won’t work anymore and I will need to change it.

When I’ll be at that point, I intend to buy a used car at a dealership. It doesn’t have to be an old car; a 1-3 years old model will still do the trick, shouldn’t have tons of mileage, and should be more affordable than a brand-new car.

Example

To put numbers on this perspective, let’s take a regular Honda Civic sedan.

Let’s say you were going to buy a brand new 2021 Honda Civic. As of now, in Canada, the basic LX model is at $25,185 (without any other options).

If you look up older models, like the 2019, the same car is priced at around $20,690. For a car just a couple of years older, you save almost $5,000. It’s worth thinking about it.

There’s always the option of buying from a regular individual but, and I insist, HAVE IT INSPECTED BY A PROFESSIONAL. Buying from someone doesn’t come with a warranty. You don’t know exactly what the car has been through, if they took them regularly to the mechanic for maintenance, if they modified it, etc.

Even if you know the person really well, have the car inspected. It’s your money, after all.

Dodged a bullet

Once, my ex and I wanted to buy a minivan for his locksmithing business. He had his sights set on one from a person in our city, so we took it to the mechanic where I had been going to forever (even my parents went there for years; we trusted this garage). An hour later, the mechanic called us and said “it’s a piece of trash, I’m surprised you were able to drive it here”. Basically, everything under the van was severely rusted and we would have spent thousands on repairs… For a vehicle that was $1,000.

Didn’t dodge a bullet

Remember my first car, the 1992 Mazda Protege? It was the year 2007. I bought it from a distant relative. I was young and naive, and my dad said it was a good car. That was enough for me. I bought it without having it inspected first.

All I wanted was a vehicle that could make it possible to see my ex. He lived in a smaller town where I had to take 3 buses to get there (it would take me about 2 hours, vs 20 minutes by car). I had a crush on him back then and I thought that having a car would give me a good excuse to pick him up to hang out with our friends.

I still have nightmares about that car…

• The gas line was rusted; gas was literally dripping out of my car all the time.
• The brake line was rusted… Enough said.
• The car stopped working in the middle of winter, in February, in a blizzard, on the highway. (A good Samaritan was nice enough to help me get it started again. Bless this guy!!!)
• Once the engine was hot, I couldn’t break. If I was at a stop or a traffic light, I had to keep my foot on the gas AND the brake pedals so the engine wouldn’t stop working.
• I had to change many other parts, like the brakes, the timing belt, and the catalyzer (or something like that… Don’t even ask me to name car parts).

I was working part-time at a grocery store at minimum wage (that was about $8/h back then). I literally spent every single cent I had on repairs. So yeah, before buying a used car, HAVE. IT. INSPECTED. I ended up selling it to a guy about my age who wanted to fix it.

Parting thoughts

Buying (or leasing) a car is an important step in your life, especially if it’s your first one. Choose the option that fits your needs, whether it’s buying a used car or leasing a vehicle and getting a brand-new car every other year. Make sure to include it in your budget!

No matter what you decide, I will repeat it again, HAVE THE CAR INSPECTED!

Do you have good or bad stories about getting a new vehicle? Let me know in the comments below!