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Whether your current car has some wear and tear, you’re looking to upgrade the gas mileage or you want the latest and greatest technology, buying a new car is an exciting time. It’s also full of stressful decisions that will make you want to pull your hair out. One of those tough decisions is whether you should be buying or leasing a new car. Our team here at Tax Crisis Institute is here to help you make the tough decisions. 

Financing or Leasing a Car: Which is Better?

What Is the Difference Between Buying and Leasing a Car?

The main difference between buying and leasing the car is the ownership of the car. When you buy a car, you own the vehicle and can keep it for as long as you choose. If you lease a car, you are basically renting it from the dealership on a long-term basis. 

The option that’s best for you is largely dependent on what you’re looking to get out of the car. Before making this decision, sit down and think about what you are buying this car for. Are you hoping to get you a car that lasts years or a temporary upgrade? Here are some of the main things to consider when making your decision. 

Monthly Costs

Car Payments

If your number one priority is getting the lowest monthly payments, leasing could be your best option. Monthly lease payments are typically cheaper than auto loan payments because they’re based on the car’s depreciation instead of its purchase price. These cheaper payments will help you balance out your monthly budget.

However, it’s important to remember that these monthly payments won’t end up in ownership. This means that when the lease is up, you will more than likely have to lease again. While buying may come with pricier monthly payments, it will eventually lead to ownership when the loan is paid off. 

Car Insurance

This is something that is very important to keep in mind when making your decision. Comprehensive and collision coverage may be required when you’re financing a car. Some lease agreements include gap insurance at no extra cost so it doesn’t hurt to ask whether it’s included. 

If you’re going to be choosing gap coverage, make sure to do your research. Compare quotes from different insurance companies before deciding on a plan. This will help you be as cost-efficient as possible.

Overall Costs of Buying and Leasing a Car

Financing or Leasing a Car: Which is Better?

Down Payment

When financing your car, your required downpayment could be anywhere from 10% to 20% of the car’s total cost. Your credit score will also play a big factor in how much money you pay upfront when leasing a car. Someone with a low credit score, for example, would likely have a larger down payment. 

Leasing can require significant upfront costs, including the first month’s payment and down payment. When buying a car, a big downpayment may be a smart decision however, this is not the case for leasing. You will want to consider keeping your down payment as low as possible when leasing a new car. 


How often your car suffers dinks and dents should also play a big role in your decision. Repair costs can be pricy for both car buyers and lessees. However, cars are typically leased for three years and will likely be under warranty for the duration of the lease. 

With that being said, lessees may have to pay for maintenance and repairs when you return the car. If you are worried about the potential cost of repairs, leasing the car may be in your best interest. As your car gets older, it will require more and more trips to the repair shop for maintenance and upkeep. However, once your car is paid off, the cash that previously went to monthly payments can now be spent on repairs and upkeep. 


If you’re a car owner, putting a lot of miles on your car is one of the fastest ways to tank its value. The higher the number of miles the lower people will be willing to pay to buy your car if you’re selling it. However, depreciation also affects lessees just as much if not more than buyers. 

Auto leases typically come with mileage limits, usually set around the 12,000-mile mark. Going over that park can cost you a penalty fee of around 15 cents per mile. These miles can add up if you go over your mileage limit. 

Leasing Fees

Here are some of the other fees you may have to worry about when you choose to lease a car rather than buy:

  • Acquisition fee – this fee covers the administrative costs for arranging the lease
  • Security deposit – this can cost as much as one month’s payment
  • Early termination fee – if you terminate your lease early you will more than likely be paying an early termination fee
  • Disposition fee – this covers the cost the company pays to clean and sell the car at the end of the lease


If you’re a driver who doesn’t like the idea of being locked into one car for too long, leasing may be for you. This will allow you the opportunity to drive something new every few years. This is also a solid option for anyone who needs a nice car as a part of their job. 

However, leasing doesn’t provide you with the ultimate flexibility. If you decide you want a new car and break your lease early, you could be on the hook for some hefty penalties. You may even have to cover the remaining lease payments as well as any penalty fee. 

Tax Crisis Institute has been a tax relief leader for over 30 years. When you work with the Tax Crisis Institute, we’ll make sure you don’t pay anything more than you owe! 

We currently service Bakersfield, Los Angeles, Orange County in California and Las Vegas in Nevada.

Call Tax Crisis Institute today for a FREE consultation!