Is It Better to Lease or Buy a Car?
- How does leasing work?
- Making lease payments
- The pros and cons of leasing
- How to shop for car insurance
Leasing is a low-commitment option that comes with some limitations—while buying costs more upfront, but gives you more freedom.
When you’re deciding whether to lease or buy a vehicle, your choice should take your financial flexibility and lifestyle into account.
That’s why the car insurance comparison shopping and broker app Jerry has compiled everything that you need to know about leasing a car, how it works, and the pros and cons that come with leasing a vehicle.
Whether you choose to lease or buy, Jerry can help you find the best cheap car insurance rates so that you can afford a better monthly payment plan.
Not to mention—the average Jerry driver saves $879 a year on car insurance.
How does leasing work?
When you take out a lease on a vehicle, you basically agree to rent that vehicle from the dealership.
The lease term stipulates the length of the lease. It is usually either 36 or 48 months.
The difference between leasing and buying
When you choose to buy your payments will be based on the sale price, the interest rate, and the number of months.
Once you pay off the loan, you will own the vehicle and are free to do as you wish with it.
When you decide to lease, your lease contract will usually include all of the following factors:
- Taxes and Fees
- Rent charges
- Expected mileage
- Length of the lease
- Sale price
- Residual value of the vehicle at the end of the lease
When the lease term is completed, you will return the vehicle to the dealership.
Abiding by lease terms
You will also have to agree to certain lease terms. If you haven’t met these terms, you could be on the hook for fees when you return the car.
For example, most leases come with expected mileage limits built into the lease price. You will probably be allotted about $10,000 miles a year for a lease term—although you can pay more monthly to increase your mileage allotment.
If you exceed your yearly allotment, you will have to pay fees for the extra miles at the end of the lease.
In most cases, you can also choose to buy the car after leasing it. If so, the pre-arranged purchase price will already be laid out in your lease contract.
Leasing is a good short-term option if you’re okay with abiding by a few restrictions—like mileage limits.
Making lease payments
In most cases, monthly lease payments will be lower than monthly loan payments on the same vehicle.
Some dealerships or manufacturers may require you to make a down payment before taking out a lease contract. This isn’t always the case, so it might be a good idea to shop around if you prefer to put less money down upfront.
Generally speaking, the more that you put down up front, the less you will have to pay on a monthly basis.
A larger down payment can also help offset the purchase price if you plan on purchasing the vehicle later down the line.
The pros and cons of leasing
Whether or not it is better to lease or buy a vehicle depends on your personal needs, preferences, and budgets.
Here are some of the pros and cons of choosing to lease:
Pros of leasing
Lower monthly payments: If you are on a tight monthly budget, leasing can be a great way to get behind the wheel of a vehicle that you couldn’t otherwise afford to buy.
No long-term commitment: The average lease term is only three to four years. Leasing is a good idea if you want to make sure you love a vehicle before you commit to buying it.
Better warranty: In most cases, you can enjoy full warranty coverage throughout the course of your lease term—so repair bills probably won’t be a problem.
Insurance minimums: Most lease contracts will also require that you take out full insurance coverage on your vehicle. This means you will likely have to purchase additional comprehensive coverage and collision insurance, which will provide you with adequate coverage in the event of an accident.
If you’re looking for insurance for your leased vehicle and you don’t want any of the hassle of shopping for car insurance quotes online, you can always use Jerry to help you save on your rates.
Answer a handful of questions (that take roughly 45 seconds) and Jerry will instantly provide you with competitive quotes that provide similar coverage to your current plan.
Cons of leasing
Mileage limitations: Leasing is usually not an ideal option for anybody who spends a lot of time behind the wheel. The average mileage limitation of 10,000 miles a year might not be sufficient for long daily commutes or spontaneous road trip adventures.
Higher long term costs: When you lease, you will be making rental payments for the entire lease duration. As such, buying is generally considered the more affordable long-term option.
You can’t alter or modify the vehicle: A contract will typically stipulate that you return the vehicle in good condition. If you damage any superficial components of the vehicle, you will probably have to pay a fee to cover the cost.
How to shop for car insurance
Whether you choose to lease or buy your vehicle, using Jerry is always the best way to find the most affordable insurance coverage fast.
If you’re hesitant to switch plans or insurance providers because you’re worried about the work involved, don’t be. Jerry does all the paperwork for you. You’ll never have to print out anything, go to the post office, or get on the phone. Jerry handles it all. Really!
No wonder Jerry is the top-rated insurance app in the country. The reviews say it all!
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