Buying vs. Leasing a vehicle for Olympia Residents

Making car financing decisions has become trickier in Olympia this year. Our hefty 9.8% local sales tax, combined with Washington tax increases, means the decision to buy or lease isn’t as straightforward as it used to be. We’ve put together this guide to help you decide whether buying or leasing is best for you.

Car Purchase vs. Lease: A Financial Breakdown

Happy Customer and Agent Reading the Contract by Gustavo Fring is licensed with Pexels License 

Traditionally, leasing tends to offer lower monthly payments while buying allows you to build equity in your vehicle, offering long-term value. However, the world of car financing is changing, and many people are unaware of how narrow the payment gap has become. According to Experian data, nationally, monthly lease payments now average $638, while for loans, it’s $655, and that’s just $17 more per month. With car prices climbing and the average new vehicle nearing $50,000, it’s more important than ever to understand whether buying or leasing is the right choice for you.

Buying a Vehicle: Ownership Benefits and Costs

Buying works in your favor the longer you keep your vehicle. Every payment builds equity, and once you’re done paying off your loan, you’ll own your car outright. This means you’ll not only own something of value, but you can drive payment-free for years to come.

Buying also gives you total freedom to customize your vehicle how you want and drive as far as you like. The downside is that new cars depreciate fast, losing up to 30% of their value in the first year. That’s potentially thousands of dollars lost the minute you drive off the lot. Also, that 9.8% Olympia sales tax hits hard when you buy a vehicle. On a $30,000 car, you’ll be paying nearly $3,000 just in sales tax. Add on registration and dealer fees and other charges, and you’re looking at another $500-$1,000 before you even hit the road.

Leasing a Vehicle: Lower Payments With Trade-Offs

Lease payments work differently from loans. You only pay for the car’s depreciation during the lease term plus some financing fees. That’s why monthly costs run lower. However, most leases cap how far you can drive at 10,000-12,000 miles annually. Drive more than this and you’ll be liable for excess mileage costs of around 10-25 cents per mile.

You’ll also be liable to pay for any damage or wear and tear when your lease ends, so that door ding from the Safeway parking lot or the coffee stain from your morning Capitol Building commute might cost you. Plus, terminating your lease early can prove to be expensive, sometimes equaling all the remaining payments.

It’s also worth noting that leasing companies often require higher credit scores than lenders do for car loans. A strong credit score gives you better rates on either option, but if you’ve got a score below 580, qualifying for a lease can be tough.

Leasing vs. Buying a Vehicle: Best Types of Cars

Different models and makes of cars depreciate at different speeds. Electric vehicles (EVs) tend to depreciate fast, so leasing an EV makes much more sense than buying, especially with how fast the technology changes.

In comparison, traditional gas cars hold their value better. Research shows that the average new vehicle retains about 44.6% of its sticker price after five years, while some top-performing models, such as the Toyota Tacoma and Tundra, hang onto more than 60%. For these models, buying may be the better option.

Negotiating Your Deal in Olympia

Timing really matters when car shopping. Visit dealerships at month- or year-end when sales teams are scrambling to hit targets. Always bring preapproval from your bank or credit union, know your trade-in value, set realistic price expectations, and focus on the total price, including taxes and fees, not just the monthly payments. You can check resources such as Kelley Blue Book before shopping, so you know what similar cars cost. Don’t fear walking away — sometimes that’s your strongest move and can result in the best deals.

Making the Right Choice for Your Situation

Whether to lease or buy depends on your lifestyle. If you drive long distances, plan to keep your car long term, want to modify it, or don’t want to be tied into endless payments, buying may be best. On the other hand, leasing is great if you want lower monthly costs, love switching cars every few years, and drive under 12,000 miles annually.

Ready to explore your options? Contact us and speak to our finance team at Titus Will Hyundai. We know the local market inside and out and can help you make the right decision for your specific situation.

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