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Car Buying Versus Leasing

A car loan isn't required if you lease the car instead.
Find out below which is right for you.


Ownership   Ownership
CAR LEASING:
You do not own the vehicle, you just rent it. At the end of the lease you can return the car or choose to buy it.
  CAR BUYING:
You own the vehicle and get to keep it at the end of your payments.
Monthly Payments   Monthly Payments
CAR LEASING:
Monthly lease payments are usually lower than monthly loan payments because you are paying only for the vehicle's depreciation during the lease term, plus rent charges (like interest), taxes, and fees.
  CAR BUYING:
Monthly loan payments are usually higher than monthly lease payments because you are paying for the entire purchase price of the vehicle, plus interest and other finance charges, taxes, and fees. The larger your down payment the smaller your monthly payments.
Early Termination   Early Termination
CAR LEASING:
You are responsible for any early termination charges if you end the lease early.
  CAR BUYING:
You are responsible for any pay-off amount if you end the loan early.
Vehicle Return   Vehicle Return
CAR LEASING:
You may return the vehicle at lease end, pay any end-of-lease costs, and "walk away."
  CAR BUYING:
You may have to sell or trade the vehicle when you decide you want a different vehicle.
Mileage   Mileage
CAR LEASING:
Most leases limit the number of miles you may drive (often 12,000-15,000 per year). You can negotiate a higher mileage limit and pay a higher monthly payment. You will likely have to pay charges for exceeding those limits if you return the vehicle.
  CAR BUYING:
You may drive as many miles as you want, but higher mileage will lower the vehicle's trade-in or resale value
Excess Wear   Excess Wear
CAR LEASING:
Most leases limit wear to the vehicle during the lease term. You will likely have to pay extra charges for exceeding those limits if you return the vehicle.
  CAR BUYING:
There are no limits or charges for excessive wear to the vehicle, but excessive wear will lower the vehicle's trade-in or resale value.
End of term   End of term
CAR LEASING:
At the end of the lease (typically 2-4 years), you may have a new payment either to finance the purchase of the existing vehicle or to lease another vehicle.
  CAR BUYING:
At the end of the loan term (typically 3-5 years), you have no further loan payments.

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