Should I lease or buy a car?

It’s time for an upgrade. As you dream about getting behind the wheel of a new vehicle, a question comes up: Should you buy or lease a car?

When deciding whether to lease vs. buy a car, there’s no one-size-fits-all answer. Both options come with tradeoffs depending on your budget, lifestyle, and how long you plan to keep your vehicle. Here’s what to consider before you start shopping. 

If you’re buying a car in Colorado, local taxes, registration timelines, and emissions requirements can also influence whether leasing vs buying a car makes the most sense.

Consider financing before you look for a car

Before deciding between leasing a car vs. buying, it helps to understand what you can afford. In Colorado, it’s especially helpful to know your full budget upfront since taxes and registration fees vary by county.

Talking to your financial institution about getting prequalified for an auto loan gives you a clear price range and monthly payment target. It also puts you in a stronger position when you’re comparing car lease vs. buy options at the dealership.

You can also use our car loan calculators to estimate:

• Monthly payments
• Loan amount and term
• Interest rate

👉 Take a look at our auto loan calculators to get started. 

Leasing a car vs. buying: Pros and cons

When weighing leasing a car vs buying, think about how much you drive, how often you want a new vehicle, and your long-term financial goals.  Leasing can also help Colorado drivers stay in newer vehicles, which may delay emissions testing requirements depending on the model year.

Benefits of leasing a car

Leasing a car means you’re essentially renting it for a set period, typically two to three years.

Some of the key benefits of leasing a car include:

• Lower monthly payments compared to buying
• Little to no upfront costs in some cases
• Ability to drive a newer vehicle more often
• Some maintenance costs may be included

Because of these advantages, many drivers exploring the lease vs buy car decision prefer leasing — especially if they like upgrading vehicles frequently.

However, leases often include mileage limits and fees for excess wear and tear, which can add up over time.

Benefits of buying a car

Buying a car gives you full ownership once your loan is paid off. 

If you’re asking yourself, “Should I lease or buy a car?”, here are some reasons buying may make more sense:

• No mileage limits or usage restrictions
• Long-term cost savings once the loan is paid off
• Ability to sell or trade in the vehicle
• More flexibility to keep the car as long as you want

Note: If you plan to buy, keep in mind that Colorado requires registration within 60 days. 

For many, the car lease vs. buy decision comes down to long-term value. If you plan to keep your vehicle for several years, buying is often more cost-effective.

How do you choose an auto loan?

If you decide buying is right for you, your financial institution can help you compare rates, loan terms, and monthly payment options.

At Elevations, members may qualify for added benefits like:

• Competitive rates
• GAP insurance options
• Rate discountswith qualifying checking accounts

What to know about buying or leasing a car in Colorado

If you live in Colorado, there are a few state-specific factors to keep in mind when deciding whether to lease or buy a car.

1. Sales tax varies based on where you live

Colorado has a 2.9% state sales tax, but your total rate depends on your local city and county. In many areas, total taxes on a vehicle purchase can land between roughly 4% and 8%. 

One important detail: You pay tax based on where you register the car — not where you buy it. When comparing leasing a car vs. buying, keep in mind taxes and fees affect your total cost either way. 

2. You’ll need to register your vehicle within 60 days

After buying a car in Colorado, you’re required to title and register it within 60 days to avoid late fees.

If you buy from a dealership, they often handle the paperwork for you. If you buy from a private seller, you’ll complete the process at your county motor vehicle office.

3. Emissions testing may apply (especially along the Front Range)

If you live in the Denver metro area, Boulder, or other Front Range counties, emissions testing is part of owning a vehicle. When comparing the pros and cons of car leasing vs buying, this can be helpful to anticipate.

• Most newer gas vehicles are exempt for their first seven model years.
• Older vehicles typically require testing every one to two years.
• Leasing often means driving newer vehicles that mayavoid emissions requirements early on

4. EVs can reduce your tax bill

Colorado income tax credits may be available for leasing and buying electric vehicles. 

The state may also offer a rebate for Coloradans with specific incomes recycling high-emissions vehicles and replacing them with electric cars (leased or purchased), helping reduce your purchase or lease cost.

5. Plan for additional fees beyond the sticker price

In Colorado, your total cost may include:

• Registration and title fees
• Annualregistration renewal fees
• Possible dealerfees (like documentation or handling fees)

These costs vary by county and vehicle type, so it’s helpful to estimate your full “out-the-door” price early.

Frequently asked questions: Leasing vs. buying a car

Is it better to lease vs. buy a car?

It depends on your priorities. If you want lower monthly payments and a new car every few years, leasing may be a better fit. If you’re focused on long-term savings and ownership, buying is often the better option.

What’s the main difference between leasing and buying?

The main difference is ownership. Leasing means you return the vehicle at the end of the term, while buying means you own the car once your loan is paid off.

Is leasing a car cheaper than buying?

Leasing typically has lower monthly payments, but you could be charged for mileage and are not typically working towards ownership. Buying may cost more upfront, but it can be more affordable over time once your loan is paid off.

Are there mileage limits with leasing?

Yes. Most leases include annual mileage limits. Exceeding those limits can result in additional fees, which is important to consider when choosing between lease vs buy a car.

Can you buy a car after leasing it?

In many cases, yes. Some lease agreements include a purchase option at the end of the term, allowing you to buy the vehicle if you decide to keep it.

Ready to take the next step?

If you’re ready to move forward or could use help deciding between leasing a car vs buying — we’re here to help. 

• Talk through your options:You can easily make an appointment with a financialsolutionsguideat one of our branches.
• Crunch the numbers:Our free calculatorshelp youvisualizeyouroptions foranautoloan, auto refinance, and car affordability.
• Apply for an autoloan:The online applicationis fast and easy.