Lease or Buy?

Pick up a newspaper and peruse the car ads. Deeply discounted sticker prices or ultra-low monthly payments entice with the promise of deals seemingly too good to be true. Take a closer look at the details, however, and you're likely to find that those rock-bottom prices and payments apply only to a handful of vehicles on the lot. Worse yet, those come-and-get-it teaser prices may not qualify for low interest rates on a traditional loan.

Ads touting shockingly low monthly payments are most likely for leases. The fine print will tell you a few thousand dollars are due up front as a down payment (capital cost reduction) in order to net such a payment. In effect, you're lowering your own monthly lease payments by paying some of the charges up front, neutralizing a key benefit of leasing over purchasing: driving a new car for little out-of-pocket expense.

It's no wonder deciding how to pay for a new car or truck is daunting. Although there are several ways to finance a purchase, the more fundamental question many of us grapple with is whether we should buy or lease.

There are fans on both sides of the fence. As much as any other factor, the decision boils down to personal choice, your current financial situation, and your lifestyle. Leasing can be a good deal for one person and a really bad deal for another.