Financial breakdown for buying vs. leasing a vehicle

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In times when everyone is trying to cut costs and save money, surprise expenses can become a major setback.  One expense many Americans can't live without is an automotible.  If you've found yourself in need of a new vehicle but can't decide whether to buy or lease, there are some financial factors you should be aware of before you make your decision.

Buying - advantages:

• You will own the vehicle and continue to build equity as you make payments
• Vehicle owners have the option to sell the vehicle at its depreciated resale value
• You can set a time limit to pay off your loan, and after, you will be debt free for vehicle payments
• No commitment for a certain period of ownership, meaning you can sell the vehicle at any time
• No mileage restrictions or penalties

Buying - disadvantages:

• Monthly payments are generally higher than leasing
• After the manufacturer's warranty is up, you are responsible for all maintenance costs
• The buyer usually must give a down payment
• Most financing loans come with a substantial interest rate depending on the buyer's credit history

Leasing - advantages:

• Lower monthly payments
• Cost-free maintenance during the lease period
• Some companies give lease-to-buy offers, allowing you to purchase the vehicle at its depreciated resale value at the end of your lease
• You can trade in a lease every few years for a newer model
• If the vehicle you desire costs more than you can afford, you might be able to afford to lease the vehicle 
• Leased vehicles used for business purposes can easily be deducted on your taxes

Leasing - disadvantages:

• At the end of your lease, you don't own anything and have not built any equity
• You must pay high cost-per-mile penalties if you go over your mileage limit
• You can expect to have a monthly payment as long as you are leasing the vehicle
• Insurance companies often charge more for coverage on leased vehicles
• Security deposits are typically required at the beginning of a lease

There is no definitive answer to which is better - buying or leasing.  It is a matter of personal preference and individual financial situations.  Below are links to several resources for those looking to buy, sell or lease a vehicle.

Use Kelley Blue Book to calculate your vehicle's depreciated resale value.
Learn more about leasing a vehicle using Lease Guide's lease kit.
Get the CarFax before you purchase a used vehicle.
Know your FICO score and credit history before purchasing a new vehicle.