When it comes to buying or leasing a vehicle the options can be confusing, To help you to make an informed decision we have provided the following information to serve as a resource for you in determining the best option for you.
When you buy a new or used vehicle, you pay for the entire cost of the vehicle. One the other hand, when you lease a vehicle, you pay only a portion of the vehicle’s cost, which is the part you use during the time you are driving it.
Buying
Who Owns It
Whether you pay for the car with cash or you finance it and make monthly payments, the vehicle you purchase is yours. Of course, if you finance the vehicle, you will have to meet the obligations the lender requires such as a certain down payment amount and timely monthly payments. If you don’t they have the right to repossess your vehicle.
Up-front Costs
If you finance your vehicle, the bank will probably request a down payment. You can also trade-in another vehicle and use that equity towards your down payment. The amount of the down payment is based on lender requirements and your credit score.
Future Value
The future value of your vehicle is the amount of money your vehicle will be worth if you look to sell it in the future. A large part of your vehicle’s value is based on how well you maintain it. (Be smart and protect your investment with regularly schedule maintenance by a factory-authorized facility.)
End of Payments
One you’ve paid off what you owe on your financing contract, the vehicle is 100% yours. The lending institution will send you a Lien Release as proof that the vehicle is completely paid off.
Leasing
Who Owns It
When leasing a vehicle, you do not own it. You are paying for the use of the vehicle. If you used a financing institution to lease it, they actually own it. This is why you pay less per month with a lease than if you were to purchase it.
Up-front Costs
Leases often do not require any type of down payment. All you usually have to pay is the first month’s payment, a security deposit, the acquisition fee and any other fees and taxes. But, as with a purchase, if you want to lower your monthly payments you can always pay more upfront.
Future Value
In most leases, you don’t end up owning the vehicle so you won’t end up selling it. That’s the financial institution’s job. Although you may have mileage limits and wear and tear guidelines that, if you exceed them, could cost you more money when you turn your vehicle back in.
End of Payments
Most people return the vehicle at the end of the lease term. You may also have the option to purchase the vehicle during or at the end of the lease. You may also be able to trade the vehicle in for different one before the lease is over. Just ask about these different options before signing any paperwork to ensure that you get the lease set up the way you want it.
Best Cars to Lease
The best cars to lease are those with the best book value after the terms of the lease. Since they depreciate less, you pay less. Review the lease ratings to see which cars retain their value the best.
Buying vs Leasing at Vern Eide
For more information on buying verses leasing a vehicle, please contact us at Vern Eide. Our experienced finance staff are here to help you find the best financing options whether purchasing or leasing your next vehicle.
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