Is It Better to Buy or Lease a Car? It Depends.
Car Buying Options: Loans vs. Leasing #
When considering a new car, consumers typically face two main options: purchasing with a traditional loan or leasing. Both choices have their merits, depending on individual circumstances.
For those prioritizing long-term cost-effectiveness, buying a car with a loan and continuing to drive it after the debt is paid off is often the most economical choice. However, leasing may be a more attractive option for individuals seeking lower monthly payments and smaller down payments.
Electric vehicles (EVs) and plug-in hybrids present an interesting consideration in the leasing market. Tax incentives for leased models can make these eco-friendly options more affordable. Recent data shows a significant increase in EV leasing, with nearly half of new EVs acquired through leases in the second quarter of this year, up from approximately a quarter in the previous year.
Interest rates for car loans are influenced by various factors, including economic conditions and individual credit scores. As of August, the average interest rate for new-car loans stood at 7.1 percent, while used-car loans averaged 11.3 percent.
While recent changes in benchmark rates may impact car loan interest rates, experts suggest that multiple rate adjustments would be necessary before car buyers see substantial effects on their financing options.