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Lease vs Buy: Which is Best for My First Car?

Mar 13, 2024
Find out if leasing or buying your first car is the best option for you

First-time car buyers have a lot to consider when deciding whether to lease a brand-new car or buy an affordable vehicle they will someday own. While leasing may offer a newer, fancier car with lower monthly payments; obtaining a car loan and buying your first car you will someday hold the title to is very (financially) appealing. 

Lease vs Buy: Which is Best for a First-Time Car Buyer?

When it comes to determining whether you should consider lease vs buy for your first car, it is first important to know a few facts about each so that you can make an educated decision about what’s best for your unique situation.

The Difference Between Leasing and Buying a Car 

  • Leasing a Car – Those who decide to lease a vehicle vs buying a vehicle are signing up to rent the car for a pre-determined amount of time. You will not ever own the car outright, but you can get a new one when the lease term is done with no worry of having to sell it. Typical lease payments average around $450 a month with usual terms of 36 months. 

  • Buying a Car – Those who decide to buy a vehicle vs leasing a vehicle can do so at an auto dealership, from a friend, from an advertised seller, or even at a car auction. If you have saved enough, you can pay cash for the car, or you also have the option of working with an experienced lender to obtain a car loan to buy the vehicle. The average used car loan is around $20k with a monthly payment of $400, while a new car loan is about $45k with a monthly payment of around $575.


Leasing vs Buying a Car: Things to Keep in Mind When Comparing Both Options

There are many differences when it comes to leasing vs buying a car for the first-time car buyer. It is important to know some of the good and bad points about each to ensure you make a smart decision. From ownership, up-front costs, and monthly payments to financing options, and early termination, here are some pros and cons to consider for each option when car shopping.

Pros and Cons of Buying My First Car

Before deciding on a specific vehicle, take a look at the vehicle identification number (VIN) on the vehicle's title and where it's stamped on the car. If any of these numbers don't match, this is an indication of a problem. You can also use the VIN to pull a history report from a company like AutoCheck or Carfax. Then pull a safety report from the National Highway Traffic Safety Administration to check on any vehicle safety recalls.

Pros of Buying a Car

  • When buying your first car, the payments you make each month build equity until you pay off the car loan and own the vehicle

  • Drive anywhere you want and enjoy the benefit of unlimited miles without penalties when you own a car vs leasing it

  • When you decide you no longer want the car, you can trade it in at your auto dealership for cash or it can be sold anytime you wish

  • Up-front costs are typically lower than leasing a car and you save on security deposits, acquisition fees, and more. 

Cons of Buying a Car

  • Buyers will see a rapid depreciation on their vehicle; however, the cash value is theirs to use

  • Monthly payments are typically higher than leasing because you have a large, set balance to pay off versus rental payments that end when your lease expires

  • Since first-time car buyers do not often have credit established, higher interest rates may apply unless you work with an experienced lender who offers a first-time car buyer program 

  •  Any maintenance and repairs that are not covered by the warranty are the responsibility of the car owner 

Pros and Cons of Leasing My First Car

Pros of Leasing a Car

  • Some vehicle leases include oil changes and other routine maintenance saving you money on scheduled maintenance fees

  • When leasing a vehicle vs buying a vehicle, you always get to drive a newer model car

  • Leasing typically offers lower monthly payments than buying, giving you a newer car for less money

  • Leased vehicles are typically covered under the manufacturer’s warranty and you are not responsible for repairs 


Enjoy our money and time-saving tips for your car-buying journey by downloading our free guide:

Car Loans 101: Car Buying Made Easy



Cons of Leasing a Car

  • There are often fees due when you return the vehicle when the lease expires

  • All money paid via monthly payments equal no equity in the vehicle and is simply a rental fee for its use

  • Lease contracts often limit the number of miles allowed, with mileage penalties if you go over 

  • Leases can sometimes be difficult to get out of if you change your mind which may include early termination penalties and/or fees 

While both leasing and buying a car have their own set of pros and cons, both are great options for first-time car buyers and research is suggested when lease vs buy car decisions are being discussed. 


Lease vs Buy: Determining Which is Right for You When Buying Your First Car

When trying to decide which scenario works best for a first-time car buyer, it is a good idea to consider both options – car loans and car leasing. Savvy car shoppers can do their research to determine the best way for them to acquire a new vehicle. Compare these pros and cons of leasing vs buying a car to see which works best for your needs and financial situation so that you have a dependable vehicle you can afford to drive.

For those who want to build a solid financial foundation and want to invest wisely; buying your first car vs leasing your first car makes better money sense. In fact, just six years of leasing (two consecutive three-year lease contracts) will amount to thousands more dollars when compared to simply buying your first vehicle by paying cash or with a car loan. And once the car loan is paid in full, car buyers vs car leasers will see an even bigger increase in their savings by having the benefit of driving the car with no monthly payment at all!

While there is no set answer for all first-time car buyers when it comes to leasing vs buying a new car, connecting with the professional car loan specialists at your local credit union is the best place for first-time car buyers to start. When you work with an experienced lender at your neighborhood credit union, you can get honest advice about your first car purchase and even get pre-approved to buy your first car with a brand-new car loan! 

If you are ready to take the next step as a first-time car buyer, we are here to help. Contact CCCU today to get pre-approved for your first Car Loan, or to talk to our loan experts about your unique financial situation. We are here to help!