Buying Versus Leasing a Car
Are you in the market for a new car? To determine whether leasing or buying makes better sense for you, think about the following:
- Ownership: If you lease a car, you do not own it. You get to use it but must return it at the end of the lease unless you choose to buy it. If you buy a car, you own the vehicle and get to keep it at the end of the financing term.
- Up-front costs: If you lease a car, up-front costs may include the first month's payment, a refundable security deposit, a capitalized cost reduction (like a down payment), taxes, registration and other fees. If you buy a car, up-front costs include the cash price or a down payment, taxes, registration and other fees.
- Monthly payments: 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, taxes, and fees. 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. When interest rates are low and dealer incentives high, buying may be cheaper.
- Early termination costs: If you end the lease early, you are responsible for any early termination charges. If you end the loan early, you are responsible for paying off any amount you still owe on the car.
- Vehicle return: If you lease a car, you can return it at the end of the lease, pay any costs, and walk away. If you buy a car, you have to sell or trade it in when you want a different one.
- Mileage: Most leases limit the number of miles you’re allowed to drive (often 12,000-15,000 per year). If you exceed the limit, you will likely have to pay extra at the end of your lease. You may be able to get a higher mileage limit if you are willing to make a higher monthly payment. If you buy a car, you can drive it as many miles as you want. However, high mileage can lower the car’s trade-in or resale value.
- Excess wear: Most leases limit wear to the vehicle during the lease term. You will likely have to pay extra charges for excessive wear when you return the vehicle. If you buy, there are no limits or charges for wear. However, excessive wear will lower the car's trade-in or resale value.
- End of term: At the end of the lease (typically 2-4 years), you may decide to either finance the purchase of the car or lease another one. At the end of the loan term (typically 4-6 years), you have no further loan payments and own your car out right.
We Can Help
If you have a complaint about an auto loan or lease contact us for help
or call toll free within North Carolina 1-877-5-NO-SCAM.