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Photo: Virrage Images (Shutterstock) Since buying a car is one of the biggest purchases you can make, it’s wise to take a look at all your options. Both leasing and buying have advantages and disadvantages, just like renting versus buying a house. The most obvious difference is that with a lease, you get a new car every few years and don’t have to deal with the hassle of selling the car later; just hand the keys over to the dealer and get a new lease. When you buy a car, on the other hand, each payment you make on a financed car builds equity; once you pay off the loan, it’s yours free and clear and you can sell it (or donate it) for something later. (If you buy a car outright without a loan, you save even more money.) What to consider when buying vs. leasing Since you asked primarily about which makes the most financial sense, here’s how to figure that out and more considerations. As an example, let’s look at the cost between buying or leasing a $20,000 car for five years, assuming the same 6% rate on a new car loan (paid off in 3 years) and the lease (two 3-year leases), and driving 12,000 miles a year (numbers provided by Edmunds). Your monthly cash flow Leasing a car often has a lower monthly payment compared to financing a car with the same loan terms, since with a lease you’re paying for the depreciation of […]