Buying a car from a dealership typically involves negotiating a down payment amount and then making equal monthly payments until you have paid for the vehicle in full. Most people appreciate having a valuable asset and not having to go out and buy another car for several years.

However, others prefer to pay less for a leased vehicle upfront. Leasing a vehicle also allows the opportunity to purchase it outright or upgrade to a newer model at the end of the lease period. Consider these pros and cons before making a decision on your next vehicle.

Purchasing a Vehicle Outright or Making Monthly Payments

Buying a car and immediately receiving its title might be the better option if you prefer to maintain complete control over the vehicle. You decide when the car needs gas, maintenance, and repairs. You also decide how long to keep the vehicle.

When you lease a car, you usually pay fees associated with how much gas you use and the amount of wear and tear you place on the vehicle. As a car owner, you’re free to drive it wherever you want and for as long as you want.

Although owning a car can help you build equity for reselling it later, you should also keep in mind that the value of new cars depreciates quickly. Several factors play into your vehicle's depreciation rate, including make, model, mileage, shifting consumer preferences, and condition.

Would Leasing a Vehicle Be Better in Your Situation?

Shorter lease terms of two to three years are attractive to many drivers rather than committing to a loan of five or more years with a bank or dealership.

Here are some additional benefits to consider:

• You can continue to lease the same make and model if you prefer.
• You’re always driving a newer model vehicle.
• You won’t have to deal with fluctuations in trade-in value because you’re not the one who arranges the car sale.
• You can relax knowing your leased vehicle has all the newest safety features.
• Another benefit of leasing a vehicle is that you have no responsibility to dispose of the car when your lease expires. You can drive an upscale vehicle that you might not be able to afford if purchased outright.

On the downside, leasing vehicles for years means you’re never done with car payments. You also need to add up what it would cost to go over the dealer’s mileage limits since it could be as high as 50 cents a mile in some cases. Excess wear and tear charges could add up also, and you might disagree with what constitutes excessive. Make sure to read and fully understand your lease contract before you go through with the deal.