Leasing vs. Financing a Car

If you want to drive a new or pre-owned vehicle but don’t want to pay for the entire car before you leave the lot, there are a few ways you can get behind the wheel. Two popular methods for drivers are leasing and financing. While both leasing and financing can allow you to drive off the lot in the car of your choice, they have unique benefits and might fit drivers with different needs. Here are some key benefits of leasing and financing, along with some tips to help you choose the option that’s right for you.

The Difference Between Leasing and Financing

When a customer leases a car from a dealership, they pay to use the car for a lease period, like two or three years, and pay a monthly fee to the dealership or a third-party leasing company. Once the lease period is over, they can choose to renew the lease or return the car to the dealership. Customers who finance a car have an agreement where they pay the vehicle’s cost, plus a finance charge, in monthly installments. When they pay off the entire amount, they own the car outright.

Benefits of Leasing a Car

Here are some reasons that many drivers choose to lease their cars from the dealership:

• Lower down payment: Since you’re not buying the car, you can usually get a lease agreement with a low down payment, or no down payment at all. This lower amount might allow you to lease a newer or more expensive car than you’d otherwise be able to afford.
• Lower monthly payments: Usually, monthly lease payments for a certain car are lower than the driver would pay under a financing agreement since you’re only paying to use the car. If you need a car for your commute or to run errands, then leasing can offer you a more affordable option for a new or almost-new vehicle.
• Flexibility to trade in: Lease agreements usually last between two and three years, and drivers can choose to renew them at the end of the term. This means that you can decide between staying in the same car and trying a different vehicle every two or three years.

Benefits of Financing a Car

Here are some benefits to financing a car purchase:

• Ownership: While financing a car usually involves a higher down payment and higher monthly charges than leasing, the money you pay the dealership goes towards purchasing the car, rather than just using it. Finance agreements usually have specific terms, like 72 or 84 months, in which you pay a standard amount each month, but you can pay more towards your car to own it sooner.
• No mileage limits: Car lease agreements usually have mileage limits, which impose a fine on drivers who put too many miles on the car. Because the goal of financing is for you to own the car, financing agreements don’t include mileage limits, so can drive your car as much as you like during the financing period, even before you’ve finished paying for it.
• No damage charges: Along with mileage limits, car lease agreements often impose additional damage charges for drivers who get into accidents or who cause damage to the car in another way. When you finance a car, you’re responsible for any damage you may cause to another vehicle, but you don’t owe the dealership any additional money if the car experiences wear or damage.

How To Choose Between Leasing and Financing

Here are some steps you can take to choose between leasing and financing a car:

• Think about your average mileage: If you plan to use the car to drive long distances for a commute or other travel, then you might go over the mileage limits on a leased car. To avoid paying a fine, you might choose to finance your car purchase, so you can put as many miles on it as you want.
• Consider your needs: While leasing a car can be a good choice if you’re using it to commute short distances, it might not be ideal for people who use their vehicles for off-roading or heavy work, since lease agreements often penalize wear and damage. If you need a new work truck or want an SUV for off-roading, financing might be a better option, since you won’t have to pay additional fees for wear.
• Reflect on your future plans: Leasing a car can be a good plan if you’re expecting to need a different car within a few years, while financing is an ideal option if you want to own the car for longer. For example, if you plan to start a family in a few years, you might choose to lease a sedan while you research the type of family car you want to own later.
• Use leasing to try different car types: Since leasing doesn’t involve a long-term commitment, it can be a good choice for drivers who want to try a new type of car, like a sports car or a truck. Once you decide on the type of car that fits your lifestyle, you might choose to finance a purchase.
• Decide who will be driving the car: Leasing agreements often only allow the owner of the car to drive it during the lease period, unless the owner requests permission from the leasing company. If you plan to have multiple people drive your car, it might be better to purchase it through financing, so you’ll have more control over who can drive it.

Whether you’re planning to lease or finance your next vehicle, the team at Eskridge Chevrolet is here to help. If you’re looking for a short-term leasing opportunity, we offer a variety of lease deals for Chevrolet cars, trucks, and SUVs. For financing, our Finance Center is staffed with experts who can help you get the best deal possible to pay off your vehicle. Stop by our Guthrie location or contact us today.

 

CHEVROLET sign by Mike Mozart is licensed with CC BY 2.0

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