The first question to ask yourself if you're deciding whether to buy or lease a car has little to do with the numbers

Westend61/GettyIf you’re deciding whether to lease or buy a car, remember that numbers aren’t everything.
  • If you’re deciding whether to lease or buy a car, focusing only on the monthly payment can be misleading.
  • According to one expert, you should also ask yourself, “What kind of car owner am I?”
  • How you answer this question will reveal what you value – if you want frequent “upgrades” or have a “pay as you use” mindset, then leasing may be the better option. If you’re motivated by long-term cost, buying could make more sense.
  • Visit Business Insider’s homepage for more stories.

Cars are expensive to maintain and seldom considered a lucrative investment, but having one is a necessity in many cities across America.

Most people focus on two things when they’re weighing the decision to lease or buy a car: the monthly payment and how much they will use it.

“The conventional wisdom has been that whether you buy or lease is most dependent on how many miles you drive – i.e. if you drive more than 15,000 miles per year, you shouldn’t lease. It’s important, but it’s not the only factor,” Alain Nana-Sinkam, a vice president of strategic initiatives at TrueCar, told Business Insider.

Leasing is popular among millennials aged 25 to 34, according to Nana-Sinkam, making up about one-third of their new car purchases, which may be attributable to the rise of ride-sharing. They’re growing more accustomed to a “pay for what you use” philosophy, he said.

“Consumers who lease tend to look at transportation as an ongoing, consumable expense, like groceries, rather than an investment in property,” Nana-Sinkam said. “For example, even though the numbers may say it’s cheaper in the long run to grow your own food, most people decide it’s more convenient to buy whatever food you need, when you need it.

And despite what many people believe, buying isn’t always the better option.

Focusing only on the monthly payment can be misleading, too, Nana-Sinkam said. It may give you an idea of affordability, but it doesn’t include insurance, gas, and for car owners, other potential maintenance costs. It also may cloud your ability to choose a car based on the features and capabilities you want and need, he said.

A better point of focus, according to Nana-Sinkam, is answering the question, “What kind of car owner am I?”

“How long do you want to keep your car? If you’re attracted to the newest designs, features, and technologies, leasing will give you the flexibility to ‘upgrade’ more frequently,” he said. “If you’re motivated by the lowest long-term cost, buying and keeping your cars longer will make more financial sense.”

However, buying also requires more planning, and maybe even a shift in perspective. “For people who enjoy the ‘freedom of not having a car payment’ on their 7-year-old sedan, I say ‘You have a car payment. You just don’t know when it’s due or how much it is. This month it’s zero, next month it may be $US600 for new brakes, and the month after that $US175 for an oil change and a tune up, and so on,” Nana-Sinkam said.

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