What’s the Smarter Financial Move for You?
Because “monthly payment” is only half the story.
Two Keys, Two Roads
Leasing and buying a car can feel like a simple choice—until you realize it’s less about the car and more about your overall financial picture. At Paragon Wealth, we’re big fans of asking why before what. So let’s take a closer look at both paths.
Leasing: Flexibility and Simplicity
Pros:
- Lower monthly payments
- New car every few years
- Repairs often covered by warranty
Cons:
- Mileage limits (hope you don’t like road trips)
- No equity built
- Fees for excess wear and tear
Best Fit: Clients in transition, business owners using their vehicle for work, or anyone who prefers predictability and lower commitment.
Buying: Ownership with Long-Term Value
Pros:
- You own the car
- No mileage limits
- Can drive it for 10+ years with no payments
Cons:
- Higher monthly payments
- Responsible for maintenance after the warranty ends
- More money tied up upfront
Best Fit: Those nearing retirement, with stable cash flow, or who drive a lot and want to build long-term value.
Residual Value and Money Factor: The Fine Print That Matters
Residual Value: This is the estimated value of the car at the end of the lease. A higher residual value generally means lower monthly payments. Choose brands known for holding their value well—think Toyota, not used hoverboards.
Money Factor: This is the lease’s interest rate in disguise. Multiply it by 2,400 to get a rough annual rate. Example: 0.0025 × 2,400 = 6%. If the dealer won’t disclose this, run.
Real-World Scenarios
- Sarah, small business owner: Leases a luxury SUV and writes off a portion of the lease through her business. Low commitment, high image, tax-smart.
- David, approaching retirement: Buys a certified pre-owned sedan with cash. No payments, no surprises, and a car that’ll last.
- Emily, recently divorced: Chooses a 3-year lease for a reliable new car while she rebuilds her financial footing and credit.
Final Thoughts
Leasing and buying aren’t right or wrong—they’re just different routes. If you’re making the decision in isolation, it might feel like a coin toss. But when you view it through the lens of your full financial plan, one option typically stands out.
Need help figuring out which option fits into your long-term strategy? Give us a call or email to learn more. At Paragon Wealth, we help you see the bigger picture—even if it starts with four wheels.
About Phil Rosenau
As a graduate of Germantown Academy, Phil Rosenau earned his bachelor’s degree in economics at Drew University, while also earning a minor in business management. His passion for creating and maintaining business relationships drove him to join the Prudential Advisors team, where he met Charlie and Ricardo before starting Paragon Wealth together.
Phil is a lifelong resident of Bucks County and the son of a local entrepreneur. He understands the unique needs of small business owners, takes pride in providing his clients with the knowledge to understand their unique financial situation, and helping them navigate their financial future with confidence. He enjoys spending time with his wife, Caroline, and two children, he is the current president of the MDM networking group, and he is active with the local CrossFit community. Phil is also proud to be part of the Drew University Lacrosse Legacy where he played all four years. You can find Phil here on LinkedIn, or here on Facebook.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All investing involves risk including loss of principal. No strategy assures success or protects against loss.
Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Great Valley Advisor Group, a Registered Investment Advisor. Paragon Wealth Management and Great Valley Advisor Group are separate entities from LPL Financial.