Leasing vs. Financing

Leasing

A lease is similar to an extended rental agreement. You agree to certain terms and conditions and plan to return the vehicle to the dealership after a set period of time.

Pros

• Your monthly payments will likely be lower.
• You will get to drive something different after just a few years.
• You can transition from one vehicle to another with minimal hassles.

Cons

• You never build equity in your vehicle.
• You are restricted in how much you can drive or modify the vehicle.
• You are subject to penalties for damage or a breach of the lease contract.

Financing

Financing is another term for an auto loan. A lender agrees to give you the amount necessary to cover the purchase price, then you pay back that amount with interest added.

Pros

• You are the owner of the vehicle and free to drive and modify it freely.
• You have the right to sell the vehicle whenever you want and recoup some of the sales price.
• You stop paying monthly payments once the financing agreement has been repaid.

Cons

• You often pay more on a monthly basis.
• You may find it hard to find a buyer or fair price for an older vehicle.
• You have to pay more for maintenance and service when you drive an older vehicle.

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