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While the price of a new cars is coming down as chip shortages ease (a little bit), you may still be looking at a hefty price tag for that vehicle. Is it a better idea to lease instead of buy?

If you choose to buy a new or used car, prices are still going to be a bit inflated from a few years ago — even as the supply shortages start to ease. Dealers are less likely to negotiate and offer the big rebates of years past, so be sure to take that into consideration.

On the other hand, you can think of a lease like renting a vehicle for a long period of time (usually two or three years). You may need to pay the first month’s payment, registration fees and a security deposit upfront and often your lease is limited to a certain number of miles per year. At the end of your lease, you can either give the car back to the dealership to lease something else, end the lease and buy a car, or buy the car you’ve been leasing for a pre-determined price.

If you’re already leasing a car and you’re near the end of your lease — or if you’re planning to trade in your current ride — there may be some good news: Auto dealerships are in desperate need of cars to sell, and you may get a higher price than expected for your trade in or lease buyout. That can give you a jump start on your next purchase or lease.

To Buy or Lease… That is the Question

In every market, there are some drivers who are better suited toward owning a car and others who benefit more from leasing.

While individual circumstances vary, in general, you can expect the cost of purchasing and leasing a vehicle to approximately break even at the three-year mark.

While a lease may offer you cheaper monthly payments, you’ll likely earn back two-thirds of the price you paid from buying a car if you sell it after three years.

With a lease, you’re usually dealing with whatever financing options and price the dealership is offering. If you buy, you likely have more choices when it comes to the loan you get and the interest rate on your loan. (Tip: Call us at CommonWealth One to talk about auto loans, our TrueCar buying service and more.)

If you choose to buy a car (or buy the car when your lease is over) and eventually pay off your loan, you may enjoy years without a car payment at all, which is great for your finances.

Here are some other important factors to consider when making this decision:

How long do you hold onto your cars? If you like to swap in your cars for a newer model every few years, a lease may be a better fit for your lifestyle. On the flip side, if you tend to hold onto your cars for many years, consider buying a car instead.

Insurance costs. Leases require full insurance coverage, which can be pricey. When you own your vehicle, though, the amount of insurance coverage beyond what is required by law is your decision. If you like having full protection, including GAP insurance, which pays the difference between what you owe on a car and its true value if it’s totaled in an accident or stolen, a lease may be a better choice for you. If, however, you tend to purchase just minimum coverage, you may be better off purchasing your vehicle.

Mileage. If you usually put more than 10,000 miles on your car each year (the standard amount allowed by most leasing companies before charging extra), you may be better off buying a car. Keep in mind, though, that you’ll still need to pay for those miles in depreciation costs of the car.

Maintenance costs. When you lease a car, most maintenance costs are on the leasing company. You’ll need to spring for anything related to wear and tear of the vehicle, but most other repairs will be covered. You’ll also have the option to pay extra for tire protection, and dent and scratch insurance.

Running the numbers? The professional certified financial counselors at CommonWealth One are happy to sit down with you, your budget and a calculator to determine if leasing or buying is the right move for you. It’s as easy as stopping by a branch or calling to make an appointment.

Stay safe out there!

Information is valid as of publication date and rates are subject to change without notice. Click here to view current deposit rates and current loan rates

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