Lease or buy? It's a decision that many college students have to make each year when they venture into the world of car shopping. But which should you choose and why is it a better idea?
According to James Wates, sales manager at Big Two Toyota in Mesa, Ariz., financing is not the best idea for most students. However, the best choice may depend on whether you have developed a solid credit history.
"Most students are first-time buyers and don't qualify for financing because they haven't yet established credit," Wates said.
The main difference between leasing and financing is that under the leasing option, a student can choose to either keep the car or return it at the end of the lease term. On the other hand, financing requires a student to take full possession of the car and ultimately pay for the entire vehicle.
Sara Thorson, an Arizona State University junior, decided against leasing when she purchased her 2001 Toyota Corolla almost a year ago.
"I wanted to be able to keep the car after I had been paying for it for the entire time," she said. "With a reliable car, it was more worth it to finance than to lease it."
While Wates agrees that financing does establish good credit for first-time buyers with no credit, he said leasing is often a better option.
"One advantage to leasing is that you don't have to invest in the long term," he said. "Most students don't know what they want or need yet and so leasing works really well for them."
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