Buying vs. Leasing

Should You be Buying a Car or Leasing a Car?

The answer? It depends. Leases and loans are simply two different methods of automobile financing. One finances the use of a vehicle; the other finances the purchase of a vehicle. Each has its own benefits and drawbacks.

It’s not possible to simply say that one is always better than the other because it depends on your own particular situation and preferences.

You must not only look at the financial comparisons but also at your own personal priorities and what’s important to you.

Is having a new reliable vehicle every two or three years with no major repair risk more important than long-term cost? Are long term cost savings more important than lower monthly payments? Is ownership more important than low up-front costs and no down payment?

So, the comparison of buying vs. leasing a car is not quite cut and dry. There are some things worth considering first before you decide on either available options.

Buying and leasing are different.

When you are buying a car, you pay for the entire cost of a vehicle, regardless of how many miles you drive it. You typically make a down payment, pay sales tax in cash or roll them into your loan, and pay an interest rate determined by your loan company. You make your first payment a good month after you sign your contract.

When you are leasing a car, you pay for only a portion rather than the complete cost of the vehicle, which is the part that you “use up” (depreciation) during the time you’re driving it. You have the option of not making a down payment, you pay sales tax only on your monthly payments (in most states), and pay a money factor that is similar to the interest rate on a loan. With leases, you may also pay additional fees and possibly a security deposit that you don’t pay when you buy. You make your first payment at the time you sign your contract.

Buy vs lease example:

Here is a buying vs. leasing a car example: if you lease a car that costs $20,000, that will have an estimated value of $13,000 after 24 months, you pay for the $7000 difference (depreciation), plus finance charges, plus fees.

When you buy, you pay the entire $20,000, plus finance charges, plus fees.

This is fundamentally why leasing offers significantly lower monthly payments than buying.

Contact us

If you have any questions about either process, contact the experts at our dealership here to find out more information. We will work with you and within your budget to get you into your dream Toyota model today!