Leasing Vs. Buying


Should I worry about not having "ownership" of my vehicle?

No. More than likely there is no specific reason which requires you to own the vehicle. Leasing a vehicle does not prevent ownership--it postpones the decision until the end of the lease term. Unless you have completely paid off your current vehicle, it is the bank who owns your car--not you. Leasing insulates you from negative resale market conditions over which you have no control or influence.
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Do I drive too many miles for a leased vehicle?

No. Actually, the more miles you drive the more you should consider leasing. Heavy mileage depreciates a vehicle whether you own it or lease it. Leasing allows you to put a lot of miles on the bank's car, not yours.
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How is leasing is different from buying?

 

Leasing

Buying

Ownership

You do not own the vehicle. You get to use it but must return it at the end of the lease unless you choose to buy it

You own the vehicle and get to keep it at the end of the financing term.

Up-front Costs

Up-front costs may include the first month's payment, a refundable security deposit, a capitalized cost reduction (like a down payment), taxes, registration and other fees, and other charges.

Up-front costs include the cash price or a down payment, taxes, registration and other fees, and other charges.

Monthly payments

Monthly lease payments are usually lower than monthly loan payments because you are paying only for the vehicle's depreciation during the lease term, plus rent charges (like interest), taxes, and fees.

Monthly loan payments are usually higher than monthly lease payments because you are paying for the entire purchase price of the vehicle, plus interest and other finance charges, taxes, and fees.

Early termination

You are responsible for any early termination charges if you end the lease early.

You are responsible for any pay-off amount if you end the loan early.

Vehicle return

You may return the vehicle at lease end, pay any end-of-lease costs and "walk away."

You have to sell or trade the vehicle when you decide you want a different vehicle.

Future value

The lessor has the risk of the future market value of the vehicle.

You have the risk of the vehicle's market value when you trade or sell it.

Mileage

Most leases limit the number of miles you may drive (often 12,000 - 15,000 per year). You can negotiate a higher mileage limit and pay a higher monthly payment. You will likely have to pay charges for exceeding those limits if you return the vehicle.

You may drive as many miles as you want, but higher mileage will lower the vehicle's trade-in or resale value.

Excess wear

Most leases limit wear and tear to the vehicle during the lease term. You will likely have to pay extra charges for exceeding those limits if you return the vehicle.

There are no limits or charges for excessive wear and tear to the vehicle, but excessive wear will lower the vehicle's trade-in or resale value.

End of term

At the end of the lease (typically 2-4 years), you may have a new payment either to finance the purchase of the existing vehicle or to lease another vehicle.

At the end of the loan term (typically 4-6 years), you have no further loan payments.

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