Buying vs. Leasing
Buying vs. Leasing a Car
Understanding the Differences
Understanding the differences between buying and leasing is key to making an informed vehicle purchasing decision that aligns with your finances, lifestyle, driving routine, and personal preferences.
The following compares the pros and cons of buying and leasing, the economics of each, and why you might choose one over the other.
Buying
Who Owns It
When you buy a car, either with cash or financing, the vehicle is yours. If you finance, you’ll need to meet the lender’s requirements, including timely monthly payments. Failing to do so could result in repossession.
Most people finance through a dealership, bank, credit union, or private lender. Loan terms usually range from three to six years and depend on income, credit score, and vehicle price. After the loan is paid off, the car is fully yours.
Upfront Costs
Financing a car usually requires a down payment, often between 10% and 20% of the vehicle’s MSRP, which reduces monthly payments. You can also use the equity from a trade-in to offset this cost.
Future Value
New cars depreciate quickly—up to 20% in the first year. However, buying allows you to build equity, which can be applied toward your next vehicle. Your car’s resale value depends on its condition and maintenance, so regular service at a factory-authorized facility is recommended.
End of Payments
Once your loan is paid off, the vehicle is entirely yours. You’ll receive a lien release as proof of ownership.
Leasing
Who Owns It
Leasing means you don’t own the vehicle. You pay for its use, while the finance company retains ownership. This often results in lower monthly payments compared to buying.
Leasing also protects you from certain depreciation risks, such as recalls or unexpected drops in market value.
Upfront Costs
Leases typically require only the first month’s payment, a security deposit, acquisition fees, and applicable taxes. Additional upfront payments can reduce monthly costs if desired.
Future Value
At lease end, you usually return the car. Mileage limits (typically 12,000–15,000 miles per year) and wear-and-tear guidelines apply, and exceeding them may incur extra costs. Lease terms usually range from two to three years, offering drivers the option to upgrade regularly.
End of Payments
At lease end, you can return, purchase, or trade in the vehicle. Dealers can explain these options to ensure your lease meets your needs.
Best Cars to Lease
Vehicles with strong resale values are ideal for leasing, as they depreciate less and typically result in lower lease payments.
Buying vs. Leasing: Which Is Right for Me?
Choosing between buying and leasing can be difficult. Speak with a local dealership to explore your options and find a plan that fits your financial situation and driving habits.
The finance center at Tim Short Ford of Morehead offers a variety of leasing and financing options for new Ford vehicles and pre-owned cars in our inventory. If you’re ready to lease or buy your next vehicle, contact us online.