Many consumer advocates say that buying a car is better than owning it. When you buy a car, you own an asset worth thousands of dollars. When you lease, you are paying for the use of the car during the lease term and you don’t own anything.
In truth, buying a car may be a good deal if you pay all cash or if you plan to hold onto it for many years. However, most people finance their cars with loans stretching five or even six years. Meanwhile, the typical car buyer gets a new one every three or four years.
The bottom line is that many car buyers have little or no (or even negative) equity in the cars they own. They owe more than the car is worth, sometimes by thousands of dollars. The result can be especially painful if your car loses trade-in value because of safety issues or an oversupply of similar models.
Therefore, if you think you’ll be turning over your car every few years, you should at least consider leasing. Get all the information on a lease and on a purchase, then compare the numbers to see what makes more sense.