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Should I Lease or Buy my next Automobile?

Updated: Jun 7, 2023

Replacing an automobile is an inevitable and recurring life event, and clients often struggle to decide whether to lease or buy. There are advantages to both options and the analysis is not strictly financial. The needs, circumstances, and preferences of each individual client must be considered along with the overall costs. With many competing factors that bear different degrees of importance, it can be difficult for clients to prioritize their goals, weigh their options, and identify their best course.

To help you guide our clients as they consider whether to lease or buy an automobile, we have created this flowchart. It covers several key decision points based on factors including:

  • Costs and cash flow

  • Mileage and use

  • Safety and technology

  • Depreciation

  • Flexibility


In the ever-present debate of whether to buy or lease a vehicle, clients often find themselves grappling with the decision. While the financial aspect is important, it's crucial to consider individual needs, circumstances, and preferences. To shed light on this topic, Todd Pouliot of Gateway Financial presents a comprehensive guide exploring the factors that should influence your decision. This flowchart-based analysis covers key considerations such as cost, mileage, safety, technology, depreciation, and flexibility. Join us as we navigate through the pros and cons of each option, taking into account the unique challenges posed by the current automotive market.


Understanding Your Needs:

Before delving into the intricacies of buying or leasing, it's important to evaluate your personal preferences. If you enjoy driving a new car every few years, the question arises: do you drive a significant number of miles annually? If the answer is yes, leasing might not be advisable due to mileage limits, expenses per mile overages, and potential wear and tear charges. However, if you don't drive many miles, leasing could be a viable option. Additionally, if you're a business owner, there may be tax advantages associated with leasing and operational costs for business use.


Advantages of Leasing:

Leasing offers several benefits, including short-term commitment, warranty coverage, and the temporary use of a depreciable asset. It aligns with the principle of leasing what depreciates and buying what appreciates, as emphasized in financial planning. However, it's essential to be mindful of potential disadvantages, such as higher total costs over time, especially if you choose to buy out the lease at the end of the term. Conducting a break-even analysis can help assess the financial impact of leasing versus buying.


Considerations of Buying:

Buying a vehicle provides control over ownership, the duration of ownership, and the flexibility to use and customize the vehicle as desired. It also allows you to protect the value of the asset and potentially sell or trade it in the future. However, it's important to be aware of the downsides, including sunk costs, depreciation, potential repair responsibilities beyond the warranty period, and the hassle of trading or selling the vehicle.


Factors Beyond Finances:

Apart from financial considerations, other factors can influence your decision. If you're concerned about safety features and technology becoming obsolete quickly, leasing might be a better choice. New technologies often come with added costs, which can impact the purchase price. On the other hand, if you value flexibility in terms of vehicle duration and modifications, buying might be the preferred option.



When deciding whether to buy or lease your next automobile, it's essential to weigh various factors, including cost, mileage, safety, technology, depreciation, and flexibility. Consider your driving habits, long-term goals, and financial situation. Don't forget to consult with your tax accountant or CPA regarding any potential tax benefits associated with business use. Finally, choose a vehicle that suits your family's needs and priorities. By carefully evaluating these factors, you can make an informed decision that aligns with your lifestyle and financial objectives.


Remember to stay updated on the changing automotive landscape, including the rise of electric vehicles and fluctuating fuel prices. By choosing the right vehicle and the appropriate financing option, you can navigate the complex world of automobile ownership with confidence.

For more informative content on personal finance, visit Gateway Financial's website at www.mygatewaymoney.com. Don't forget to subscribe and stay tuned for future updates.

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