The Core Question: How Do You Actually Use Cars?
The lease vs. buy debate has a clear answer once you know two things: how many miles you drive per year and how long you typically keep a vehicle. Everything else — NJ tax treatment, monthly payments, warranty coverage — flows from those two factors.
The Case for Leasing in NJ
Lower monthly payments: Lease payments are typically 30–40% lower than financing the same vehicle. You’re paying for depreciation and use, not the full purchase price.
NJ tax advantage: New Jersey taxes only your monthly lease payments at 6.625%, not the full vehicle price. On a $40,000 car, that’s roughly $2,200 less in sales tax compared to buying.
Always under warranty: A 36-month lease almost always falls within the manufacturer’s bumper-to-bumper warranty. No unexpected repair bills.
No depreciation risk: You return the car at lease end. If the market shifts and the car is worth less than expected, that’s the leasing company’s problem, not yours.
Flexibility: Upgrade to a new car every 2–3 years. Technology, safety features, and fuel efficiency all improve — leasing lets you stay current.
The Case for Buying in NJ
Build equity: Every loan payment reduces what you owe. Eventually, you own the car outright and have no payment.
No mileage limits: Drive as much as you want without per-mile charges. For NJ drivers over 18,000 miles/year, this alone can make buying the better choice.
Long-term savings: If you keep a car for 8–10 years, the total cost of ownership (purchase price minus resale) often beats a series of leases over the same period.
Customization freedom: You can modify the vehicle, choose your own insurance levels, and make decisions a leasing company wouldn’t allow.
NJ-Specific Considerations
NJ’s tax treatment of leases is among the most favorable in the country. You pay 6.625% on monthly payments only — not on the full capitalized cost. This makes leasing financially more attractive in NJ than in states like Texas or Minnesota, which tax the full lease value at signing.
Who Should Lease in NJ?
- Drivers who change vehicles every 2–3 years
- Drivers under 15,000 miles/year
- People who want predictable costs and warranty coverage
- Those who value driving newer technology and safety features
Who Should Buy in NJ?
- High-mileage drivers (18,000+ miles/year)
- People who keep cars 6–10+ years
- Those who want to eventually be payment-free
- Buyers who want to modify or customize their vehicle
Talk to Vantage About Your Situation
Vantage works with both lease and purchase clients across NJ. We’ll run the real numbers for your specific situation — mileage, budget, trade-in — and recommend the path that makes the most financial sense. Get a Quick Quote and we’ll help you decide.
