Money Monday: Navigating The Car Buying Dilemma, Lease Or Purchase?

On Money Monday our money expert Paul Hood joined News On 6 at 4 p.m. to discuss when is it better to lease a car versus buying one outright.

"It really depends on the individual," explained Hood. "A vehicle in today's world is a cash flow issue of cost. It's not an asset. It's not an investment. They all go down in value."

Lease or Buy: Factors to Consider

According to Hood, the decision hinges on an individual's driving habits and preferences.

"If you're a keeper, if you keep cars, it's almost always better to buy the car," he said. "If you're one that likes to get a new car every three, four years, then leases are pretty good, but you got to watch them."

Understanding Lease Types

Hood shared the difference between the two main types of leases: capital leases and operating leases.

"Operating lease says we can buy it at fair market value at the end of the period," he said. "A capital lease, they're just really financing."

The Risk Factor

One key advantage of leasing, Hood explained, is that the financial institution bears the risk of the vehicle's depreciation.

"If they say the car is going to be worth 60% of its value today in three years, and it's worth less than that, you just turn it in. If it's worth more than that, you can buy it and turn around and sell it."

Leasing as a Financial Strategy

For the right individual, leasing can be a savvy financial move.

"Leasing can be a really good thing for the right type of person," Hood said. "A lot of times you can get a really higher-end car for a lease payment that's less than what you can buy a regular, okay [car]."