Buying and Leasing are completely different
The differences between leasing and purchasing a car can be a bit confusing.
Buy a car and you’ll find the price tag is for full price of your vehicle – every inch of it. The cost is the same if you drive 3,000 miles a year, or 18,000 miles a year. And the price stays the same if you typically keep your car for three or four years, or for ten. And, because you are paying for the entire cost of the car, your monthly payments will be higher, often a lot higher, than if you had leased the vehicle.
The process of buying a car is typically similar from dealer to dealer. First you are expected to make a down payment. You probably will have a choice to pay for the sales taxes at the time of signing, or have them added into your loan. Next is the interest rate on your loan. The interest rate is largely dependent on your credit score. Good credit and you’ll have a better rate. Poor credit and you can expect to pay a high interest rate.
Typically, your first loan payment will be due a month after your purchase. When it’s time to trade in your car on a new one, the amount credited to your new car will be dependent on the age, mileage and depreciation value.
Leasing is a whole different ballgame. Instead of paying for the entire car, you will only be charged for a portion of the vehicle’s cost. Lease a car for three years and you’ll only be paying for a three-year portion of the vehicle’s worth. In essence, you’ll only be paying for the time you’re driving the car.
Don’t confuse leasing with renting. When you lease a car, you are actually financing a portion of the worth of the car. When you rent a car, you pay a fixed rate for a fixed amount of time.
Another difference between leasing and purchasing is that when you lease you may be required to pay fees and possibly a security deposit. Plan to make your first payment when you sign the contract. This payment will be credited to the next month. When your lease expires, you have the choice of returning the leased car or purchasing it.
Advantages of Leasing:
In addition to enjoying lower monthly payments, leasing has many other advantages. For instance, you can drive a higher-priced fully equipped vehicle that you might not have been able to afford to purchase. Another “plus” is that you are always driving a late-model vehicle that is usually covered by the manufacturer’s warranty!
A big advantage of leasing is that the future price of your vehicle is pre-set. This means that if your car depreciates faster than originally predicted, it will have no effect on your lease. Long story short, leasing makes it much easier to get more for less.
Still have questions? We are happy to answer any questions and help you determine which is the best option for you. Give us a call at 954-975-9000 and we’ll walk you through each option!