Should I buy or lease a car?

Ask NJMoneyHelp

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Q. I’ve never leased a car, but I’m thinking about it. The list price is $23,450 and the lease cost would be $345 a month for 36 months and $1,000 down. Should I lease or buy?
— Driver

A. Leasing gives you more car for less money, but that’s not the only consideration.

The answer really depends on your needs, your car preferences and your lifestyle.

You might be able to lease a more expensive car than you’d be able to afford with a purchase, said Jody D’Agostini, a certified financial planner with AXA Advisors/The Falcon Financial Group in Morristown.

“If you want or need a more upscale car for business or entertaining, leasing may get you in a more luxurious automobile,” she said. “If this is not a concern for you, then buying may make sense.”

In the long run, a lease will cost you more than if you purchased the car and kept it for years.

But if you like having a new car every few years, with a lease, you can in theory trade in the car at the end of the term without any hassles — although we know there are sometimes additional wear-and-tear charges when you return a lease. Then you can drive away with another new set of wheels from the dealer.

That all sounds great, but if you have a long commute or drive a lot, a lease may not make sense. You’ll be limited in the amount of mileage you can put on the car, often only 12,000 miles a year, D’Agostini said.

If it’s all about the payments, you’ll probably have a lower payment with a lease.

D’Agostini said you’d have to explore what interest rate you’d be charged on a purchase and compare that to the $345 per month lease payment.

“Generally, loans have higher monthly payments, and once the car is off warranty, you are responsible for any repairs,” she said. “The used car market can be difficult as well, and when you want to sell it, you may not get back its worth. Some cars have better resale values than others.”

You’ll also need a heftier down payment to buy, and that means the money is not working for you in other ways, she said.

She said repair costs for a leased vehicle could be lower because you’re leasing a new car for say, 36 months, so the car shouldn’t need big ticket repairs in that time.

And, D’Agostini said, you will pay less in sales tax with a lease.

Whichever option you choose, do the math and be sure to read the fine print so you understand all the costs and fees.

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NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.