Key Takeaway:
- Depending on their needs and financial situation, leasing and financing can benefit a buyer.
- Leasing ensures lower monthly payments, restricted control, and the ability to change vehicles after a few years.
- Financing ensures vehicle ownership, no milage or modification restrictions, and the ability to own the car for the long term.
- Both options have their unique pros and cons, which is why they’re both necessary to understand
- Mike Patton Auto provides streamlined listings of new and used vehicles for lease or finance and offers a vast range of vehicle modifications.
There’s a lot to think about when buying your first car. Leasing vs. financing a vehicle, new vs. used, and financing options are crucial factors.
So, should you lease a car or buy it? The ultimate decision comes down to your priorities. For most drivers, it’s more about the dollars and cents. For others, the benefit of ownership is more important.
Before deciding on either of the options, you must realize the distinctions between them. Especially if you’re a first-time buyer, you’ll want to be fully aware of your options.
Let’s discuss and compare leasing and financing to help you gain a proper understanding.
Leasing Vs. Financing A Car: The Difference
Leasing a vehicle means that you can drive it for a specific time which can range from 36 to 48 months. However, there are various restrictions to milage and modifications.
After the lease expires, you can return the vehicle to the dealer and finance it at a decided amount according to the lease contract.
On the other hand, when you finance a car, you will gain immediate ownership. You can also pay outright if you want it with cash or after the loan period expires. Maintaining control over the several aspects of a financed vehicle enables you to trade it in, keep it, sell it or give it away.
Pros And Cons of Leasing a Car
In general, lease payments are lower compared to monthly loan payments. However, there are certain factors the amount will depend on. These include:
Residual Value
Residual value is the vehicle’s value at the end of its lease and includes depreciation. You’ll have to bear this residual value if you want to purchase the car after the lease.
Rent, Fees, And Taxes
Rent charges are generally shown in a dollar figure instead of a percentage and are equivalent to the interest charges. What’s more, taxes and fees will also affect the monthly cost of the leased vehicle.
Expected Mileage
The lease will determine the maximum number of miles you can drive the car annually. This is generally 12,000 miles to 15,000 miles annually.
If you exceed this mileage limit, your monthly payments will slightly increase. Additionally, exceeding the mileage determined in the dealer’s contract can cost you extra per mile exceeded at the end of the lease.
Pros Of Leasing a Car
A New Car After A Few Years
What makes leasing such an attractive option for most when it comes to leasing vs. financing a car is the feeling of a brand-new ride. Once the lease has expired, you can return the vehicle to the dealer and get a new one. Leasing also enables you to try out new and advanced vehicle models every few years.
Less Stress of Resale
You can return the car to the dealer or choose to finance it. You’ll only have to worry about paying the end-of-lease fees, including additional mileage and wear and tear costs.
Hassle-Free Maintenance
Most new cars provide warranties that can last at least three years. So, the repairs and maintenance are covered when you’re in a lease. This eliminates unforeseen expenses and saves your finances significantly.
Tax Deduction Potential
If you use your car for business, you can get tax deductions on your lease payments. The IRS allows a deduction of depreciation and financing costs that are a part of the monthly lease payments. However, if you’re leasing a vehicle for leisure, the amount you’ll be able to write off will be limited.
Cons Of Leasing a Car
Lack Of Control
You can’t sell your car or trade it in to reduce costs on your next vehicle. Moreover, since you’ll be starting on a new lease after the current one expires, you will always have monthly fees from a lack of control over several aspects of the vehicle.
No Ownership
Various restrictions can impede your lease and how much you want to drive the vehicle. You won’t be able to modify your car unless you’re willing to pay additional fees. Additional costs may incur additional costs if the changes are to be reversed at the end of the lease period.
Pros And Cons of Financing a Car
When you’re buying a car, you can keep it long-term. However, the monthly and down payments will be higher than the lease payments. There are also options for buying a pre-owned car, a new one, or a used one.
Are you confused about leasing vs. financing a used car? Our professionals at Mike Patton Auto can help you choose the best vehicle from our dedicated car listings for used cars.
Pros Of Financing A Car
Complete Control
You gain complete control over how to modify or drive your car. Once the car loan has been paid off, you can trade in, sell, or give the vehicle to a family member. There are no restrictions.
Long-Term Costs
It’s cheaper to finance a car and keep it long-term. While the monthly payments are higher than leasing, you’ll eventually own the vehicle outright and won’t have to make any more payments.
Cons Of Financing A Car
Depreciation
A brand-new car can lose around 15%-25% of its value in the initial five years of ownership. This may not be the ideal decision if you’re investing in a vehicle. On the other hand, the driving costs shouldn’t matter much if you want to keep the car for several years.
Driving Costs
According to research from 2021 by AAA, the cost of driving a car for 15,000 miles was around $9,666. These costs included maintenance, insurance, and fuel.
Which Option Should You Choose?
Leasing can be attractive due to lower monthly payments, a new car every few years, and restricted control. On the other hand, buying or financing a new vehicle gives you absolute control and eliminates all restrictions.
Determining your needs is essential when deciding about leasing vs. financing a car. Both options have merits and demerits, so you must make an informed decision.
If you’re still undecided about leasing vs. financing a car, let us help you out. Mike Patton Auto provides various services, including vehicle modifications, roadside assistance, paint coatings, and more in LaGrange, GA. Besides modifications, we also offer new and used vehicles so everyone can afford a car according to their needs.
Connect with us
