by Tip Hero JT Ripton

There’s nothing like the feeling of owning a new car. Whether it’s the intoxicating new car smell, or the euphoria that comes from a brand new purchase, driving home in your brand new car is one of the greatest feelings in the world. Before you begin fantasizing about showing off your car to neighbors and friends, you need to figure out how you’re going to buy it. With this first step comes the decision to lease or buy.

Leasing: Always Have the Latest and Greatest

Leasing a new car provides many attractive options — such as getting a newer model car every few years. If you’re the type of person who likes owning the latest thing, then leasing is for you. You’ll keep the car for three years — or the length of your lease term — then turn it back in for a newer car without regard to negotiating trade-in value or trying to privately sell the car. Plus, leasing means lower monthly payments and mechanical repairs covered by factory warranty. Take good care of the car, and at the end of your lease, hand over the keys and go pick out your next car.

Buying: What’s Mine Is Mine

The best reason to buy a new car is that it’s yours forever. Your monthly payments have a visible return on investment — ownership of the car — whereas leasing a car gives you nothing at the end of the lease term, except another lease. When you own the car, depreciation is only a burden if you decide later to sell. At the end of a lease, if the dealership determines the car has more than normal wear and tear, you’ll pay additional fees for repairs. When the car is yours, you can drive across the country three times over, but with a lease, expect your adventurous road trips to cost you for exceeding allowable mileage.

Leaser Beware

Faced with the same decision you’re contemplating, Marc Frons, The New York Times Chief Information Officer, shared his leasing experience. In his article, “What I Learned the Hard Way About Leasing a Car,” Frons details the mistakes he made in the process and what he should have done differently. His main caution is not to focus on monthly payments, regardless of what the salesperson recommends. Start your negotiations with the purchase price as you can often shave 10 to 15 percent off what is suggested. Don’t be afraid to insist on knowing this number upfront as it sometimes isn’t revealed until you’re about to sign the lease agreement.

You also should be aware of additional fees that are added to the purchase price, such as destination and acquisition fees, disposition fees, purchase option fees, and capitalized cost reduction — some of these fees are negotiable. Never go to a dealership intent to buy on your first visit. The key to getting the best price is being able to walk away when the salesperson presents numbers that don’t make financial sense. If your plan is to buy that same day, you take away your leverage to get the salesperson to lower his numbers so he can make the sale.

Choosing Between the Two 

If you’re successfully able to secure fantastic lease terms, the biggest challenge with leasing comes if you decide at the end of the lease term that you want to keep the car. Buying a car after first leasing it is often more expensive than just buying it from the beginning. That’s why it’s important to negotiate the purchase price up front — you’ll save more if you decide to keep the car.  Also, leases require much more insurance coverage than financed cars — this is something to keep in mind as you calculate your overall monthly costs for your leased car.

Ultimately, the choice to lease a new car versus buying outright will depend on whether you’re certain you won’t want to keep the car at the end of the lease. If there’s any chance — even a small one — that you’ll come to love the car too much to let it go, then you should buy.