Buying vs Leasing a Car

Buying vs Leasing: What's the Difference?

Buying and leasing are two financial options you have when looking to get behind the wheel of a new, pre-owned, or certified pre-owned car. One of the biggest differences between these two options is what happens when you reach the end of the financial plan.

When you buy, you own the car. When you lease, however, the vehicle must be returned to the dealership.

To help you learn more about these key differences-and more-let's take a closer look at the benefits and potential drawbacks to both buying and leasing!

Understanding the Buying Process

When you buy a car, you're responsible for paying for the full value of the car. Taking out a car loan is a popular choice among drivers. When you get approved for a car loan, you're making a financial agreement with the lender that you'll pay back the amount borrowed plus anything extra outlined in the loan, such as interest.

These monthly loan payments occur for a pre-set timeframe, usually over the course of three to five years.

Benefits of Buying a Car

There are many benefits that draw drivers to buying, such as:

• Vehicle ownership: Once you pay off the loan amount, you own the car. No additional loan payments are required, you'll receive the car's title in the mail, and it's 100 percent yours.
• Customization options: Since the vehicle is yours and doesn't need to be returned to the dealership, you have the freedom to customize your vehicle as you choose.
• Credit history: You can possibly increase your credit score by paying your automotive loans on time, which can help you later down the road, too!

Drawbacks of Buying a Car

While buying offers several benefits, it also has its drawbacks, such as:

• Payment amount: You'll likely notice the amount you pay per month is higher when you buy. That's because you're paying the full cost of the vehicle over a short period of time.
• Down payment: On top of monthly payments, buying typically requires a down payment. This initial payment is anywhere from 10% to 20% of the vehicle cost.
• Vehicle depreciation: Depreciation is the rate at which your vehicle loses its value. If you were to sell your purchased car in the future, its resale value may not match the money you invested in it.

Understanding the Leasing Process

When you lease a car, you and the dealership and/or lender enter an agreement where you pay for the privilege to drive a car instead of paying toward purchasing the car. Generally, automotive leases last anywhere from two to four years.

Benefits of Leasing a Car

Many drivers lean toward leasing a car for several reasons thanks to their benefits, like:

• Lower monthly payments: Lease payments typically cover the depreciation value of the car instead of its full amount. Because of that, you may pay less per month when you lease.
• Warranty coverage: Many new cars come with multi-year warranty coverage. Since car leases last a handful of years, it's possible this vehicle will remain under warranty for the duration of the lease, allowing you to potentially pay less than expected on repairs and maintenance.
• No down payment needed: While it's welcome, a down payment usually isn't required when you lease. This can help save more money up front.

Drawbacks of Leasing a Car

On the flipside, there are a few drawbacks to leasing a car, like:

• Mileage restrictions: When you sign a lease agreement, you agree not to drive more than a pre-set number of miles, generally between 9,000 to 15,000 miles per year.
• Disposition fee: At the end of a lease, you may be required to pay a disposition fee. This fee covers the amount to clean and prepare the car for resale.
• Other potential fees: A lease deal may outline additional fees you're required to pay at the end of a lease. Potential fees could be issued if you go over the mileage restriction or return the vehicle with certain cosmetic, mechanical, or structural issues

How Our Finance Center Can Help

Have you decided which financial option better aligns with your lifestyle? Need some extra help to decide? Our on-site finance team is here to help.

When you visit our dealership, you'll get one-on-one assistance from one of our financing specialists. They'll chat with you about your questions and concerns, learn more to better understand your needs, and more. Once they understand your needs, they can offer the buying or leasing plan that works best for you.

Online Tools

Want to learn more about buying vs. leasing, your financial requirements, and more before visiting our team? If so, then be sure to check out our convenient online tools and resources.

Online Financial Tools:

• Financing application: Get a jump-start on the financing process, learn about the type of leases and/or loans you pre-qualify for, and more by filling out our secure online application.
• Trade-in Car Payment Calculator: Thinking about trading in your car when you buy or lease? Fill out our trade-in form and get a firm offer in as little as five minutes.

While exploring our website, be sure also to check out our current buy vs. lease incentives. These rotate frequently, so be sure to visit often to see if your dream car is included in our current incentives!