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Pros and Cons of Buying vs. Leasing a Vehicle


Pros and Cons of Buying vs. Leasing a Vehicle

With the ever-changing landscape of automobiles, we are seeing more and more questions regarding buying vs leasing vehicles. The answer to the question is not cut and dry, as there are pros and cons to both choices. Each individual must weigh the different options to come to the proper conclusion. In this blog, we will weigh the pros and cons of each decision to assist you in coming to the best conclusion for your particular situation.


While everyone would love to own a shiny new car, it may not always be plausible. Leasing can serve as an alternative option that allows individuals to drive new cars for a fraction of the price. Compared to financing a new car, which generally entails a sizeable down payment, leasing allows for lower monthly payments and little money down. It also gives the lessee the flexibility of upgrading to a new vehicle at the end of the lease term, which is typically two or more years. You are also able to purchase the vehicle outright after a lease. For individuals that enjoy driving a new car every few years, leasing could make sense. It is important to remember that the dealer still owns the car with a lease contract, so they are responsible for repairs under most lease contracts.

The obvious downside of leasing is that you never own the vehicles being leased. Therefore, by leasing a vehicle you are taking on a liability by making monthly payments on something you do not own. Additionally, leases limit the distance you are allowed to drive the vehicle. Typical lease mileage limits are between 12,000 to 15,000 miles per year, with fees for every mile you go over the limit. There are also fees for wear and tear on the car, as well as disposition fees when returning the car.


Owning a vehicle can be a great option for a variety of individuals. The most ideal way to purchase a vehicle would be to buy it in cash, but most people often finance vehicles to avoid the up-front cost. While the monthly payments on a car loan are likely higher than that of a lease, buying allows individuals to build equity in the vehicle. When the loan is fully paid off, you own the asset and no longer have to pay at all. Compared to leases, you will also see less fees, no mileage limits, and the ability to customize the vehicle to your preferences. Lastly, owning a vehicle gives the owner the option to sell it for cash or trade in value that can be put towards the down payment of another vehicle.

While a vehicle is an asset, it is important to understand that it is a depreciating asset and will lose value over time in most cases. On average, cars lose around half of their value in the first five years of use. Another downside to owning a car is that you are on the hook for all repairs, which can be very costly at times. The worst-case scenario would be a severe engine failure that renders the car useless with little salvage value.


While there is no correct way to approach this decision, one must carefully evaluate their specific situation. In terms of longer-term value, buying a vehicle is likely to be the better option. If convenience is more important, leasing could make the most sense. If you have additional questions or would like to talk with us further, please call us at 513-271-6777. For more THOR reading, click here to go to the Blogs and Market Updates section on our website.

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Written by

Drew Woodard

Drew Woodard joined THOR in January of 2023 as an investment research analyst. He is a member of the investment committee, where he performs investment research on equities, fixed income, and alternative investments. He analyzes a wide range of companies and investment strategies to determine the best fit for the clients. Drew is an analytical thinker who loves to learn and digest new information in order to build thoughtful conclusions.

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