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Bottom Line Up Front

  • Buying and leasing a vehicle both come with pros and cons that depend on your situation.
  • Servicemembers have special circumstances to consider when it comes to car ownership.
  • Costs, the potential for PCS and ownership responsibilities all factor into whether to buy or lease. 

Time to Read

4 minutes

July 2, 2024

In the market for a vehicle? One of the first questions you’ll need to ask yourself is whether it makes sense to buy or lease. Deciding to buy or lease has even more implications for servicemembers, who often find themselves relocating or navigating unexpected life circumstances. If you’re a servicemember in need of a vehicle and aren’t sure whether to buy or lease, consider the pros and cons of both options.

The Benefits of Buying a Car

Whether you choose to buy new or used, purchasing a vehicle comes with some great benefits. Servicemembers should consider the following:

  • Ownership: When you buy a car, you become the rightful owner once you’ve completed the payment terms. A vehicle is an asset, and one you’ll have equity in when you assume the title.
  • No mileage limits: Unlike leasing, there are no mileage restrictions! Servicemembers often need to travel long distances for deployments, assignments or visits back home, so this flexibility is important.
  • Resale value: Choosing a car with strong resale value helps you recover a larger portion of your original investment if you choose to trade it in or sell it.

The Drawbacks of Buying a Car

While it’s always nice to own an asset, owning a vehicle can come with some drawbacks. Keep the following in mind if you choose to buy:

  • Higher monthly payments: Monthly loan payments for a purchased car are typically higher than lease payments. Use a lease vs. buy calculator to get an idea of the cost difference for your ideal car.
  • Maintenance costs: As the owner, you’re responsible for maintenance and repairs, which can become a burden if you’re frequently deployed and have limited time for car care.
  • Depreciation: New cars often depreciate quickly—even as you drive them off the lot. Used cars depreciate at a slower rate, so remember that as you’re car shopping.

The Benefits of Leasing a Car

Leasing is an attractive option for cost-conscious servicemembers who might not have a particular attachment to owning a vehicle. Here’s why:

  • Lower monthly payments: Lease payments are usually lower than loan payments, allowing you to drive a newer car for less money upfront.
  • No resale worries: You don’t have to worry about vehicle depreciation when you lease, since you simply return the car at the end of the term.
  • Vehicle upgrades: When you lease, you can drive a new car every few years. You’ll have access to all the latest technology updates and safety features.

The Drawbacks of Leasing a Car

When you lease a vehicle, you’re agreeing to terms of use set by a dealer. It can restrict how you use the vehicle and what you’re responsible for. Here are the potential drawbacks:

  • No ownership: Leasing is essentially renting. At the end of the lease, you don’t own anything. You’ll have to find another car, without a vehicle to sell or trade in.
  • Mileage restrictions and fees: Leased cars come with mileage limits, which can be problematic if you frequently travel long distances. Dealers also charge fees for excessive wear and tear on leased vehicles.  
  • Early termination penalties: Terminating a lease early can lead to substantial penalties, which might be a concern if your deployment or assignment plans change unexpectedly.

Special Considerations for Servicemembers

As a current or soon-to-be servicemember, your lifestyle and financial situation differ from civilians. It’s important to factor in these unique circumstances when deciding between buying and leasing a car:

  • Deployment and relocation: Servicemembers frequently face deployments and relocations. Leasing might be more suitable if you anticipate being deployed for extended periods. Just make sure your lease contract allows for early termination due to deployment without significant penalties.
  • Stability: If your assignment locations are stable and you’re planning to establish a home base, buying a car could be a sensible choice. It provides you with a steady mode of transportation that you can rely on for the long term.
  • Maintenance and repairs: Servicemembers have busy schedules, and maintaining a car might not always be feasible. Companies that lease cars often offer optional car lease maintenance packages, which cover all or most necessary maintenance and repairs.
  • Financial flexibility: Leasing generally requires lower monthly payments than buying, which could be beneficial if you’re managing other financial responsibilities alongside your service commitment.
  • Credit score: Leasing might be more accessible for individuals with lower credit scores compared to getting a car loan. If you’re still building your credit, leasing could be a way to secure a newer vehicle.

Buy or Lease With Confidence

If you’re a new or soon-to-be servicemember mulling over your options for buying or leasing a car, you’re not alone. Both buying and leasing have their benefits and drawbacks, so it’s important to consider your specific needs and circumstances before making a final decision. Whatever you choose, rely on Navy Federal Credit Union’s Car Buying Center to help you research, finance, buy, protect and enjoy your next car.

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This content is intended to provide general information and shouldn't be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.