Lease or buy?

Here’s the situation. We are late 20s, have a 2 year old and hopefully another kid on the way soon. My wife will end up being a minivan driving, kid hauling, soccer mom whether she admits it or not and we will probably be taking vacations over the summer and/or holidays that require driving every year. So, great masses, do we lease or buy one?

Note how often car dealers mention lease terms in their ads. Ask yourself: are they doing this for your benefit or for theirs?

If you buy a car, you will eventually pay it off. Then you can save the amount of the lease/car payment.

Leasing makes sense if you drive a lot, but not so much that you go over the mileage limit on the lease agreement - right up to the limit, basically - and take such good of your car that you will not get dinged for any “wear and tear” surcharges. And if you plan to trade in your car for a newer or different model after 4 years or so. Or, are interested in a car that’s not very popular but suits your particular needs (so that you’d expect a tough time reselling it on your own). Or can’t pony up the up front cash for a loan to buy a car, or are on a very fixed monthly budget and HAVE to have a particular kind of vehicle (like a pickup truck) that you can’t find cheap/reliable enough as a used vehicle within your budget.

Never lease a car “to try it out” planning to buy it at the end of the lease period “if I like it”. Buy it if you like it enough to really want to own it, and sell it if you don’t like it for some reason that wasn’t apparent during the test drives or other research you’ve done beforehand.

Personally I think the ideal way to go is to buy a late-model used car (3 years or so).

I’d probably go the “buy” route. Too many gotchas in leasing.

If it’s going to be a lot of kid hauling and trips miles will add up fast. Most leases have some type of mileage limit per year with monetary penalties for going over.
The last thing you want to have to do is be a tightwad on mileage and canceling trips cause you don’t have enough miles.
I think a lot of leases also gouge you for any wear-n-tear done to the vehicle.
With a couple of kids you could easily get scratches, niks, spills, etc. on the vehicle.

Buy it to own it and beat it up and drive it as much as you like. With a 2 year-old and a newborn you could easily need the thing for 10 years. Even after that there is always a re-sell market for mini-vans. Lot’s of new familys out there with tight budgets that need to haul their brood.

With interest rates as low as they are? Buy. You might even find a zero interest loan. What beats that?

Some people like to have a new car every few years. Do you see yourself getting a new car that frequently? If so, leasing is probably a better deal, since you’re effectively getting a guaranteed trade-in price from the dealership.

If a new car every few years seems extravagant, then leasing is a poor choice. A new car every few years is expensive, whether you lease or buy and resell.

The cheapest way to have a car is to buy a low-mileage used car and use it until its maintenance costs are greater than payments for another car. Next is buying a new car and keeping it until the costs get too high. Getting a car when your current car is not at that point is always going to cost you extra. That extra cost may be worth it to you, but it’s there.

Do you currently own a vehicle? If so, do you really need a minivan to carry 2 kids around?

Leases usually have an end-loan involved. When the end-loan time arrives, you either go ahead with that loan and continue driving the car while still making payments on a used-car loan, or they roll the end-loan into the purchase/lease of another car. Either way, you pay much more for the car than if you had just bought it. Plus, the kids will ruin the interior and if it’s leased you have to pay for that.

Your best bet is to purchase a year-old car that still has plenty of warranty on it, and you don’t have that first-year depreciation to worry about. Or a new car with a 0-1% loan if your credit can get it.