Car Leasing vs Buying
Factors to consider when deciding between car leasing vs buying:
Ownership
Car Leasing: Leasing a car is the equivalent of renting it. Once the leasing agreement has ended, the car must be returned unless a decision is made to buy it.
Car Buying: The vehicle belongs to the purchaser.
Initial Fees
Car Leasing: Initial fees may include the first month’s payment, a security deposit, a down payment, taxes, and registration.
Car Buying: Initial fees may include a down payment, taxes, and registration.
* Both car leasing and car buying may include additional fees, depending on the car dealership.
Monthly Payments
Monthly car lease payments are usually lower than car loan payments.
Car Leasing: Payments are usually based on vehicle depreciation, interest, taxes, and other fees.
Car Buying: Payments are based on the purchase of the car, interest, finance charges, taxes, and other fees.
Returning the Car
Car Leasing: The vehicle can be returned at the end of the lease once all fees have been paid. This allows for the leasing of a new and different car!
Car Buying: The vehicle must be sold or traded in order to obtain a new one.
Future Value
Car Leasing: The lessor is responsible.
Car Buying: The purchaser is responsible.
Wear and Tear
Car Leasing: Charges will be assumed if the car is damaged beyond normal wear and tear.
Car Buying: Wear and tear will lower the trade-in value of the vehicle.
End of Term
Car Leasing: Terms usually last 2-4 years, upon which a choice can be made to begin purchasing the car or simply return it.
Car Buying: Terms usually last 4-6 years, in which there are no further car loan payments are not required.
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