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. |
