Should I lease or purchase a vehicle?
We get a lot of people asking about the advantages and disadvantages of leasing as compared to buying! We put together a comprehensive guide to help you figure out which is best suited for you!
What does it mean to lease a vehicle? Leasing is very simple: Rather than paying on the total value of the vehicle, you’re only going to be paying on the depreciation of the vehicle. This means that your payment will be lower, you’ll get a new vehicle every couple of years and in addition to all of this you’ll drive a vehicle that’s always under warranty!
When you purchase a vehicle, the vehicle is yours to do whatever you please with. You can modify it, drive it as long as you want, etc. However, when you purchase a vehicle rather than lease, after the warranty is up, any repairs are on you and you’re always responsible for equity management. When you purchase a vehicle, your payment term is longer and the payment itself is higher.
Let’s look at how the payments differ:
Say you purchase a vehicle for $18,000.00 and agree to a 36 month term, before any interest or fees is charged you’re looking at a base payment of $500.00
Now, on the opposite spectrum, if you lease that same $18,000 vehicle for 36 months with a depreciation of $6,000 your payment would only be $167 before any taxes and fees.
Lease: You don’t own the vehicle, you use it and must return it at the end of your lease term (unless you choose to buy the vehicle at the end, then its yours!)
Buy: You outright own the vehicle and can keep it as long as you want.
Lease: If you end your lease early, there are fees (unless you do so during a pull ahead, then we take care of the fees for you!)
Buy: You can buy or sell or trade your vehicle at any time. You can use the money from the sale to pay off the balance of your loan, if need be.
Lease: Leasing is almost always going to have a cheaper payment because you only pay the vehicles depreciation during the term of your lease plus interest charges, taxes, fees, etc.
Buy: The payment is usually more expensive on a purchase because you’re paying the entire price of the vehicle, plus interest and other charges, taxes and fees.
Lease: The future value of the vehicle has no bearing on you.
Buy: The vehicle will depreciate over the course of your loan, but when its done any positive equity is yours to use as you see fit.
Lease: Simply put, at the end of the lease you return your vehicle and walk away.
Buy: You have to deal with the selling or trading of your car when you want a different one, there’s no specified time frame.
Lease: Most leases will limit the number of miles you can drive, there are charges for exceeding your mileage but if you’re concerned you can always purchase mileage for a cheaper price than the mileage penalties.
Buy: You’re free to drive as much as you want, but the higher the mileage of your vehicle the more it depreciates the value.
Wear and Tear
Lease: At the end of a lease, any wear and tear on the vehicle is your responsibility to have fixed. However, you can purchase additional protection like Ally SmartLease that would defray any costs. Buy: You’re under no obligation to fix anything wrong with the vehicle, however any damages or mechanical issues will negatively effect the value of your vehicle.
End of term
Lease: At the end of a lease, most customers typically just lease another vehicle. This puts you in a new vehicle every two or three years.
Purchase: At the end of the term you’re free to continue to drive the vehicle or put any positive equity you have towards your next vehicle.
To find out more about leasing or purchasing a vehicle, give us a call at 330-SWEENEY or email us at SweeneySales@SweeneyCars.com