Should I Finance or Lease a Car?

January 13th, 2022 by

If you’re considering getting a new or used car, you might wonder whether you should buy it outright or get a lease. Before you reach a decision, it’s important to review the advantages of buying and leasing. Both options come with their benefits, which is why you’ll want to have a clear idea of your needs and budget. Here’s a rundown of the differences between buying and leasing and some tips for each.

What Are the Benefits of Buying a Car?

A Ford Explorer parked in a parking lot

Ford Explorer” licensed under CC0 1.0 via Flickr by crash71100

When you purchase a car or an SUV using auto financing, you commit to making monthly payments for an agreed-upon period. Once you’ve paid the loan off, you have full ownership of the vehicle. As long as you make regular loan payments, you can use your vehicle in any way you like. That includes driving as many miles per year as you wish.

Another benefit to buying a car is once you pay off your loan, you can sell it to help fund your next purchase. For example, by using our simple trade-in tool, you can provide us with details about your vehicle so we can generate a cash offer for you. You can then deduct this offer from the cost of one of our pre-owned SUVs, trucks, or cars.

A further advantage for auto buyers is you can customize or upgrade your vehicle as you wish. You can add accessories, such as stylish wheels or window tint, and select from a wide range of available trims. By contrast, you typically must return leased vehicles to the dealership without modifications.

What Are the Benefits of Leasing a Vehicle?

If you opt to lease a car, you’re entering an agreement that allows you to drive the vehicle for a set period, such as two or three years. Your lease payments go toward covering the depreciation of the car’s value during that period, not its entire cost. As a result, monthly lease payments are typically lower than auto financing payments on the same vehicle.

Due to this cost advantage, leasing might allow you to get behind the wheel of a larger or more luxurious vehicle that better meets your needs. For example, if you’re looking for a family vehicle on a modest budget, you can lease an SUV that offers you additional space.

A further benefit to leasing is you get to drive a brand-new vehicle during its best years. Lease agreements typically last between two and four years, which means a leased car will still be comparatively new when you return it to the dealership. You’re less likely to face hefty repair costs compared to what you might have to pay to keep an older vehicle you own on the road.

Because you’ll always be driving a vehicle from a recent model year, you’ll also have access to the latest safety features and infotainment equipment. If you just can’t bear to part with the vehicle at the end of your lease, you usually have the option to buy it.

What Are the Disadvantages of Buying or Leasing?

One of the biggest drawbacks about leasing is you’ll have restrictions on how you can use your car. For example, lease deals generally have an annual mileage limit. If you drive over the limit, you’ll need to pay an excess mileage charge. 

You also need to return the leased vehicle in good condition at the end of the agreement. If the dealership decides your leased vehicle is in poor condition, they can charge you a fee for the repair work. This means if you like off-roading or other activities that cause a lot of wear and tear to your vehicle, buying it outright might be the better option.

Another disadvantage of leasing is you’ll always have to make monthly payments. By contrast, once you’ve paid off an auto loan, the vehicle is yours to keep and you won’t have ongoing lending costs. These factors can make buying a vehicle better value for money over the long term, because you’ll end up paying less in total than someone who constantly maintains a lease agreement.

A potential disadvantage to buying a vehicle outright is the hassle of selling it when you want to purchase a new car. This process might involve paying expensive repair costs so you can secure a better sales price, as well as locating a buyer who’s looking for a used car of similar make and model. On the other hand, when your lease runs out, all you need to do is return your vehicle to the dealership, and you’re free to select a new one.

How Can I Get Better Terms on a Financing or Leasing Deal?

If you want to secure the best possible terms on a financing or leasing deal, you can save for a down payment. By making a down payment at the dealership, you’ll reduce the overall amount that’s outstanding on your auto loan or lease deal. As a result, the lender might offer you a lower interest rate or shorter loan term.

You can also work on improving your credit score before taking out an auto loan or lease agreement. For instance, if you have a mortgage, credit card, or other type of loan, you can boost your credit score by making regular and on-time payments for several months.

Learn More About Auto Financing or Leasing at North Coast Auto Mall in Cleveland

As you can see, there’s no right or wrong answer when it comes to deciding between leasing or buying a vehicle. Your choice depends on your priorities. If you’d like further advice on which option is best suited to your needs, you can contact our auto experts here at North Coast Auto Mall in Cleveland.

We stock a great range of used cars, SUVs, and trucks for those of you interested in purchasing a pre-owned vehicle. We also have competitive leasing deals on offer to Ohio customers. Browse through our online inventory, or swing by our Cleveland dealership to find out more.

Posted in Used Cars