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How do I decide whether to buy or lease?
The following table presents a brief comparison of buying and leasing a car. In general, leasing is for those who want a brand new model every few years and can afford the extra cost that comes with that luxury. For most college students, buying a reliable used car is the way to go.
|Timing||Will save you money in the long term if you don’t care about getting a new car every few years||New car every 3-5 years; less hassle and comparable cost if you would be buying a brand new car every few years anyway|
|Cost||Buying a reliable used car will get you the most for your money; buying a new car will also save you money compared to leasing||More expensive than buying a brand new car and keeping it for 5+ years, and far more expensive than buying a reliable used car|
|Equity||Even though your monthly payments are likely higher than leasing, you will be paying down your loan and able to recoup some money when you sell||Nothing to your name at the end of the lease period, although dealerships will often offer you a discounted purchase price|
|Mileage||No extra costs||Penalty for exceeding mileage limit (10,000 - 15,000 miles/year)|
|Repairs & Maintenance||Frequency and costs will likely increase as your car gets older||Less hassle since you’ll have a new car every few years|
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