I have some clients who are torn between leasing a new car and buying a home. Most people cannot do both at the same time so you have to make a choice because leasing a car can consume a large part of a down payment on a home. Obviously, as a real estate agent I’m a bit biased but let’s look at the cold, hard facts:
- Leasing a car is nothing more than renting a vehicle whereas when you buy a home you own it.
- Cars depreciate the minute you drive it off the lot whereas homes can appreciate over time.
- Car lease payments are gone the minute you pay them whereas mortgage payment reduce your debt with every payment.
- Car lease payments provide no tax benefit for non-business owners whereas mortgage interest and property taxes are generally deductible reducing your total housing cost.
- At the end of a car lease period you have nothing but the need to lease another car whereas whenever you decide to sell your home you have potential equity due to mortgage amortization and possible appreciation. This obviously depends on what kind of housing market exists at the time you choose to sell.
If you’re leaning toward buying a home but your lease is coming due here are two options for you to consider:
- Leasing a less expensive vehicle. Possibly even a slightly used vehicle.
- Request an extension of your current lease.
If you have more questions about leasing a car vs. purchasing a home you can contact your accountant or me, Michael Lee, at (925) 864-8848 or firstname.lastname@example.org.