Should you lease or buy your family car?

There’s no escaping it: When you have little ones, you need more stuff. And when you have more stuff, you need more space. Whether you’re expecting your first child or growing your family, you’re probably wondering whether your current vehicle or vehicles are big enough to handle all the car seats , strollers , diapers bags , and miscellaneous stuff you’ll need to move from place to place.

There are a host of great cars out there, including lots of options for families looking for a roomier ride. But even if you know what your next vehicle is, you might find yourself stuck on one of the fundamental questions of car-buying: Should I lease it, or buy it? It’s a tricky decision, one that depends on a variety of factors, including how much you drive, how long you plan to keep the car, how big of a monthly payment you can afford, and more.

What it means to lease your family car

Leasing a car is like renting an apartment: You pay a down payment up front, typically a few thousand dollars. Then you have a monthly payment that lasts for the duration of the lease agreement, typically two or three years. Since this is effectively a rental, those monthly payments don’t go toward owning the car. So when the lease ends, you’ll give your car back to the dealership and you have to figure out how to replace it, typically by leasing your next car. Once the dealer has your car back, they clean it up and sell it, often as a certified pre-owned car.

Whether you get a good deal on your lease depends entirely on what the dealership is offering at a particular time, says Joseph Yoon, consumer analyst for the automotive firm Edmunds. Some cars are expensive to lease because they depreciate, or lose their value, quickly. In that case, the dealership is going to charge you a bigger lease payment because they know they won’t get as much for the vehicle when they sell it after your lease. Sometimes, though, you can find a great deal on a lease because the dealer wants to move a particular vehicle off the car lot. You might also do well, says Yoon, if you’re a loyal customer who’s gotten a car from that dealership before. They want to cut you a deal to retain your business and keep you coming back, lease after lease.

The pros of leasing a family car

Yoon is a fan of leases and gets all his vehicles that way. “The first time I leased, I'd just gotten my first corporate job, and the used car that I had driven for about four years had 188,000 miles on it and it was due for a lot of repairs that were going to be very costly," he says. "I decided that using a fraction of the money that I needed to make repairs, I could get into a car I really wanted for $400 a month. And to me, that sounded like a deal. So that's why I leased it the first time.”

Here are some of Yoon's most compelling arguments for leasing your family car.

You get a new car every three years

For a self-described car enthusiast like Yoon, it’s fun to be able to drive something new as opposed to buying a car and being stuck with your decision for a decade. But even if you don’t know the first thing about cars, this is still a great part of leasing. You might realize there’s something you can’t stand about your current car and you can avoid it with your next lease. These days the car market is changing fast, especially with the emergence of electric vehicles. A new car you love might come out next year, and if you’re on a lease, then you might be able to get one once your current lease expires.

There is a lot of flexibility for your family

If you're in the stage of growing your family, you might be adding more car seats to your clan as the years go on. “Leasing gives you the flexibility to swap out your vehicle depending on how your family needs change,” says Yoon. If you’re having another baby and your current car won’t accommodate another car seat, then you just need to make it until the end of your lease and you’ll be able to swap out the vehicle for a bigger one. Because he was a loyal repeat customer to a dealership, Yoon even managed to end a lease a few months early when his wife was pregnant with their second to get into a bigger ride (but don’t count on that kind of deal every time).

You don't have to worry about long-term wear and tear

All those worries about your car’s value disappear for parents who lease. No wondering whether your old car is a ticking time bomb that will need an expensive repair any moment. No fear that the family car will break down on the way to a pediatrician appointment, dance practice, or grandma’s house and leave you stranded. If you lease, you’re never in a car that’s more than three years old – and so the problems it will inevitably have when it gets old one day are not your problem. Leases typically carry a manufacturer’s warranty to cover anything that goes wrong with the car that shouldn't, like an out-of-nowhere issue with the engine or brakes. However, it's important to remember that regular maintenance like oil changes is on you, plus anything that happens as part of regular driving, like broken wiper blades or a flat tire.

You'll have a cheaper monthly payment

In nearly every case, it will cost less per month to lease a car than it would to buy that same car.

The cons of leasing a family car

Leasing is a good option for a lot of families, but it's not for everybody. There are a variety of reasons why parents might want to steer clear of leasing, especially if you’re a particularly budget-focused family.

You won't own your car

If you’re the kind of person who simply can’t stand the idea of renting things rather than owning them, then leasing isn’t for you, says Yoon. “You are making all these payments and you have no car at the end of it," he says. "Some people find that to be a bitter pill to swallow because it seems like you're spending so much money and at the end of the term, you have nothing to show for it.”

It’s never a better deal to lease

While a lease does mean a lower monthly payment, it’s also a never-ending payment since you’ll need to lease another car when the first lease is done. “If you’re perpetually leasing, over time you could end up paying more than the cost of buying a car with a loan because you’re paying for the car when it’s most quickly depreciating,” says Melissa Lambarena, personal finance expert at NerdWallet. If instead you finance your family car, then one day you’ll pay it off and own a vehicle that’s still worth something (not to mention, you'll be free of the monthly car payment). All in all, you’ll probably spend less in the long term if you buy your car, says Yoon. With a lease, you’re really paying extra for the convenience of frequently swapping into a new vehicle.

You'll have certain driving limitations

When you lease a car, the terms will include the maximum number of miles the car can be driven, typically around 12,000 per year. (It’s because the dealer doesn’t want to get the car back three years later with 75,000 miles on the odometer, which might make it harder to resell). And the penalties are stiff if you exceed that total, says Yoon. They sometimes reach as high as 25 cents per mile, which means you’re not going to take the kids on that long road trip to Yellowstone this year if the car is too close to its mileage cap.

You also need to make sure to return the vehicle in good condition, without any obvious mechanical problems, dings on the exterior, or major scratches or tears on the interior. That might be a problem if you're carting around three destructive toddlers!

You'll always be stuck in a cycle

Leasing a car means that you’ll be leasing another car in three years, and another one three years after that. That’s a lot of haggling with the dealership compared to buying a car and driving it for a decade. It means that every three years you’ll be figuring out how to fit the car seats into a different vehicle and putting more money down up-front that you’ll never see again.

What does it mean to finance your family car?

Financing a car means you get a car loan from a bank. First, you have to find the car you want and agree with the dealership on the total price you’ll pay (including all the extra features they’ll try to upsell you, plus taxes and other fees). Once you make a downpayment on the car, you’ll borrow the rest of the cost – plus interest – from the finance company, and pay them back in even installments spread out over the length of the car loan.

Down payments often amount to around 10 to 20 percent of the total car price on average, but finance experts recommend you make the biggest downpayment you comfortably can – that way, you’re lowering how much money you have to borrow with interest to cover the rest. With vehicles getting dramatically more expensive lately, it's common to take loans of five, six, or even seven years to get an affordable monthly payment.

Consider the safety ratings, reliability of the car, your financial goals and driving needs when deciding whether to lease or buy. - Melissa Lambarena, personal finance expert at NerdWallet.

The pros of buying a family car

Buying a car is, typically, a longer commitment than a three-year lease. For that reason, it’s a better choice for people who know what they’re going to need from a vehicle in the years to come. If you’re done having kids, for example, you might feel better about buying a car since you know how many people, and about how much cargo, you’ll need to carry – for the foreseeable future. Here are some other good things about buying instead of leasing.

It’s yours

A vehicle you buy might be your family car for a decade. You might bring your babies home from the hospital and send them off to the first day of 5th grade in the same vehicle. That’s worth something more than money. Buying also means you don’t have to worry about keeping your car exactly as you got it and returning it to the dealership in pristine condition. If the baby throws up on the seats or the carpet, you don’t have to worry about how that will affect you when you turn in the car. “If you have particularly destructive kids and you feel like that's going to be an issue for you to the point of anxiety, then maybe it's best to buy your car,” says Yoon.

You can do what you want, and drive as far as you want

Let’s say you have a long daily commute to the office or daycare, or your kid's grandparents live out of town. If you post 15,000 miles or more per year, then you should definitely buy your car, Yoon says, since you’ll be way over the mileage cap for any lease.

Someday, your car will be paid off

One fine day, you’ll pay the last installment and actually own your family vehicle. “When you pay off your loan, you’ll own the car as an asset and can save toward other financial goals like buying a home,” says Lambarena . Down the line, you could sell your car to somebody else if you needed the money or simply didn’t need that car anymore, or you could trade it in when you buy a new vehicle to pay less for the new car.

The cons of buying a family car

Again, buying a car is a long commitment. Because of the rising price of vehicles, a car loan might stretch out for six or seven years’ worth of payments. So before you get yourself into a 72- or 84-month payment plan, consider the cons of financing a car and what they mean for your family.

You’ll have it for a long time

You’ll probably be driving this vehicle for at least several years, or perhaps a decade or more if you’re the kind of person who hangs on to a car. That means you really need to do your homework and make sure you won’t decide in a year or two that the vehicle is not quite roomy enough for a stroller and multiple car seats and lots of other cargo. You’re not trapped by any means – you bought the car, so you can sell it if you want to – but it’s much better for your finances if you drive it for a long time.

You'll be responsible for large repairs

Once the car is paid off, you get to escape the dreaded monthly payment. But then you’re faced with the uncertainty that comes with driving an older car. You can protect yourself by buying a car known for its durability and keeping up with its routine maintenance, says Lambarena – that’s the best way to avoid expensive repairs as your car ages. Choosing a vehicle with a long warranty can help add to your peace of mind, too. You never know when an older car will suddenly need an expensive repair because a part finally fails, and if your warranty has expired, the out-of-pocket cost of that fix can be a big strain on a family whose budget is already stretched thin.

Key Takeaways

• There's no one-size-fits-all solution for buying a family car.
• If you're unsure of what your needs will be in the not-too-distant future, leasing might be a good option.
• If you're more focused on the longer-term financial picture, buying is probably best.

How to know if leasing or buying is best for your family

There's no one-size-fits-all solution for buying a family car. “Consider the safety ratings, reliability of the car, your financial goals and driving needs when deciding whether to lease or buy," says Lambarena. "Do the math for each option to understand how it aligns with your budget. By knowing these numbers, you can make the best decision for your family."

If you might have another kid in the not-too-distant future and are worried that what you need from a vehicle will change rapidly, then leasing might be right, since you can jump into a different vehicle in two or three years. Leasing is also an appealing option for families on a strict monthly budget, since the monthly payment is lower.

If you’re the kind of parent focused on the longer-term financial picture, then buying probably looks like a much smarter choice, since you’ll pay off the car and own it rather than perpetually renting. If you want a car that’s yours , and you’re pretty sure you’ll want to be driving the same car for five years or more, then go ahead and buy it.