Lease or Buy

Lease or Buy

Leasing a vehicle can offer advantages and be an attractive alternative to buying.

Lower Monthly Payments
Because you only pay for the portion of the car or truck that you actually use, your monthly lease payments are 30%-60% lower than for a purchase loan for the same car and same term.

No Down Payment
Car leasing provides the option of making no down payment.

More Car, More Often
Since monthly lease payments are lower than with buying, you get more car for your money and drive a new vehicle every two to four years, depending on the term length of your lease.

Fewer Maintenance Headaches
Most people like to lease for a term that coincides with the length of the manufacturer’s warranty coverage so that if something goes wrong with the car, the repairs are always covered.

Lower Up-front Cash
Most car leases require little or no down payment, which makes getting into a new car more affordable and frees up your cash for other things. However, you can choose to make a down payment, or trade in your old vehicle, to lower your monthly payment amount.

Lower Tax
You’re only taxed on the portion of the value that you use during your lease. The tax is spread out and paid along with your monthly lease payment instead of being paid all at once.

No Used-Car Hassles
With leasing, the headaches of selling a used car are eliminated. When your lease ends, you simply turn it back to the leasing company and walk away, unless you decide to buy it or trade it.

Gap Coverage Included
Most car leases automatically include free “gap” protection in case your vehicle is totaled in an accident or stolen, which pays off your vehicle even if insurance doesn’t cover the full loss. Loans do not generally come with automatic gap protection.


Pros of Buying a New or Used Car

  • Eventual ownership, freeing you from the pain of payments.
  • After the vehicle is paid off, you’re free to sell it at any time.
  • You can drive at will, never having to worry about mileage limits.
  • No worries over minor mishaps like spilled coffee stains on carpeting or a dog-chewed seat belt.
  • You’re free to modify and/or accessorize.
  • Insurance costs are generally lower than leased vehicles.
Cons of Buying New or Used Car

  • Monthly payments are higher than those of a leased vehicle.
  • Dealers require a hefty down payment.
  • Rapid depreciation, diminishing the vehicle’s resale value.
  • With extended use you can expect to incur repair bills.
Pros of Car Leasing

  • Substantially lower monthly payments.
  • Down payments, if at all, are small
  • Fewer Maintenance Headaches
  • No up front sales tax fees.
  • No depreciation concerns.
  • Even with a low credit rating some leasing companies will still be willing to work with you.
  • If you own a business and use the vehicle only for business purposes, you can claim it as a tax deduction.
Cons of Car Leasing

  • Higher insurance premiums.
  • You’ll always have car payments.
  • Penalties for exceeding allotted miles. This generally ranges between 15 to 25 cents per extra mile.
  • Wear and tear fees, creating heightened concern when traveling with pets or small children.