Buying vs. Leasing

Buying vs. Leasing

The $64,000 question in the auto arena.

Which is better for me, to Lease or to Buy my vehicle? It is a question that we hear hundreds of times a week. The answer is that it depends on your individual situation. While many people just look at their payments to try and answer the question, a real analysis depends on a host of financial and tax issues. We would be glad to generate a free in-depth Lease vs. Buy analysis on any vehicle for you. We guarantee that you have never seen a more thorough analysis.

Should I Lease or Should I Buy?

In reality, leasing and loans are just two different methods of automobile financing. Leasing finances the use of a vehicle for a certain period of time, and a loan finances the purchase of a vehicle. The third option is to finance the purchase of a vehicle with cash, although fewer people actually do this. Our tool is the only tool available that lets you compare leasing to purchasing with cash and purchasing with financing. It is not possible to say that one of the three methods is always the best way to pay for a vehicle. The only proper way to do this is to look at all of the tax and financial considerations of the question. For personal use automobiles, the decision will mostly be a financial one. Leasing and purchasing will have significantly different cash flows, and a proper analysis must take these differences into account.

Financial Comparison

Alpha Leasing Company has developed the most comprehensive lease versus buy analysis available on the market today. Most sites give you a financial calculator that just adds up the payments and gives you the difference. Our financial calculator also takes other things into consideration. We look at what you are going to do at the end of the evaluation period. We also look at the differences in the timing of the cash flows between leasing and purchasing and what you are going to do with the money.

Leasing typically will have payments that are significantly lower than loan payments on the purchase. What are you going to do with this excess cash? If you stick it in the bank in a savings account you might be getting 3% on your money, but if you make extra payments on your credit card, you are in effect getting an 18% to 21% return on your money. This difference alone can make thousands of dollars in differences in your lease versus buy analysis. No one else goes into this detail.

Business Use Vehicles

For business-use vehicles, the tax law treats the buying and leasing of vehicles quite differently. In many cases leasing enjoys many tax advantages over purchasing. Our program Lease vs Buy tool takes into account all of the unique tax laws related to automobiles:

  • Did you know that depreciation is severely limited for vehicles under 6,000 lbs?
  • Did you know that cars and trucks are depreciated differently?
  • Did you know that SUVs have different Section 179 limits than other vehicles?
  • Did you know that if you take a large Section 179 expense on a vehicle and then sell it 3 or 4 years later, that you will be facing a large tax bill?
  • Do you know all of the options for reimbursing employees for the business use of their vehicle?
  • Is it better to place a vehicle in the business name or your personal name?

Our experts have integrated every relevant tax law into our analysis tool so that we can give you the definitive answer on whether you should buy or lease your business use vehicle. Our analysis is completely free and there is no obligation for using it.

Next: Benefits of Leasing