Leasing vs Buying
OWNERSHIP |
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LeasingYou do not own the vehicle. You get to use it but must return it at the end of the lease unless you choose to buy it. | BuyingYou own the vehicle and get to keep it at the end of the financing term. |
UP-FRONT COSTS |
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LeasingUp-front costs may include the first month's payment, a refundable security deposit, a capitalized cost reduction, taxes, registration and other fees, and other charges. | BuyingUp-front costs include the cash price or a down payment, taxes, registration and other fees, and other charges. |
MONTHLY PAYMENTS |
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LeasingMonthly lease payments are usually lower than monthly loan payments because you are paying only for the vehicle's depreciation, plus rent charges, taxes, and fees. | BuyingMonthly loan payments are usually higher than monthly lease payments because you are paying for the entire purchase price of the vehicle. |
EARLY TERMINATION |
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LeasingYou are responsible for any early termination charges if you end the lease early. | BuyingYou are responsible for any pay-off amount if you end the loan early. |
VEHICLE RETURN |
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LeasingYou may return the vehicle at lease-end, pay any end-of-lease costs, and "walk away." | BuyingYou may have to sell or trade the vehicle when you decide you want a different vehicle. |
FUTURE VALUE |
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LeasingThe lessor has the risk of the future market value of the vehicle. | BuyingYou have the risk of the vehicle's market value when you trade or sell it. |
MILEAGE |
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LeasingMost leases limit the number of miles you may drive. 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. | BuyingYou may drive as many miles as you want, but higher mileage will lower the vehicle's trade-in or resale value |
EXCESSIVE WEAR |
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LeasingMost 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. | BuyingThere 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 |
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LeasingAt 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. | BuyingAt the end of the loan term (typically 4-6 years), you have no further loan payments. |