New England Investment and Retirement Group has spent this month offering information about maintaining healthy credit and keeping an eye on various financial practices. Many of us know about the importance of weighing the benefits and potential setbacks related to expenditures, and the choice between leasing or buying certain items is no exception. When deciding whether to lease or to buy, there is no “one size fits all” solution. It’s helpful to be aware of how each option may fit your lifestyle and specific needs.

Business-Related Purchases

Leasing business-related purchases may be a good option if you need equipment or supplies, but would prefer to hold onto cash in reserves. Business News Daily noted that when a lease agreement  is completed “you usually have the option of simply returning the equipment, or buying it for a price that factors in appreciation and how much you paid over the life of the lease.” Some purchases that are at risk of becoming obsolete in a short period of time, such as smartphones, printers, and computers, may make sense to lease if you’re planning to replace these items regularly.

While buying business-related purchases will typically cost more money upfront, the overall purchase itself is generally less expensive overall than going through a lease agreement. There are also less terms and conditions attached to buying items outright. According to Intuit QuickBooks, owning a piece of equipment allows you to make the necessary alterations and to pursue immediate maintenance without having to consult the contract or checking with the contractor to see what they require.

Real Estate

As with business equipment, there is less of a cost upfront when it comes to leasing commercial or personal real estate. As Fit Small Business reported, when leasing, “the amount of the upfront costs can be as much as a 6th of the costs associated with buying commercial real estate,” which gives your business “more liquidity since less of your capital is tied up in a long-term asset.”

For personal real estate, leasing an apartment or a house can be a great option for specific circumstances such as if you are unsure of how long you want to live in a certain city or neighborhood.

Buying commercial real estate may cost more upfront, but each monthly payment helps you build equity, and you have the opportunity to take advantage of asset appreciation as your assets grow in value. Fit Small Business also noted that there is potential to generate additional income by renting out portions of the commercial space to other tenants.

When it comes to personal real estate, buying a home is no small feat, but it is one that has long-term benefits. As with commercial real estate, owning a home means owning property that can grow in value over time, and help build your equity. According to Realtor.com, monthly payments can also be less expensive when you own, and “Homeownership provides you with the opportunity to borrow money on the equity you eventually build up by consistently paying your mortgage.”

Personal Property

Leasing personal items can include anything from your new car to new living room furniture. When looking specifically at leasing a vehicle, it’s typically not looked at as an asset but provides convenience. Business Insider noted that leasing can allow you to essentially “drive more car than you can afford,” because luxury cars that would carry higher monthly payments if purchased are likely to have lower payments through leasing, and you have the opportunity to upgrade regularly to a newer model. However, you could face additional significant costs if you damage the car, or exceed the allotted mileage.

Buying personal items allows you to own them, and it also gives you the opportunity to profit off of their value. If always having the latest model of your favorite luxury vehicle is not at the top of your list of priorities, purchasing a sensible car can pay off in the long run. When taken care of, a car can last for years after you pay it off, and you also have both the opportunity to accumulate as many miles as you desire in a certain time period and the choice of how any damage is repaired, without answering to a dealership.

Ultimately, the question of leasing or buying comes with different opportunities for different items, and when deciding which path is right for you, it’s important to take into account both what you can afford right now, and the value you are looking to gain long term.