Major Differences Between Buying A Car Versus Leasing It

Lately, there has been an increase in car price as well as the demand for advanced safety features available on a new car only is also on the rise. Therefore, leasing a car from Lease a Car Direct Service has become a preferred option instead of purchasing.

With lease a car, the lessee pays a monthly premium to drive the new car for a specific period and set terms. The monthly lease payment is lower than the financing cost of a new vehicle, but the leasing provider owns the car.

At the end of the lease contract, the lessee has to give the car key back to the leasing company. To determine the best option let’s understand what are the differences in buying or leasing a vehicle.

Major differences between buying versus leasing

Ownership

• In buying, you are the owner and can keep the car as long as you desire.
• In leasing, you are not the car owner. You can use it but at the end of the lease give it back or decide to purchase it.

Down payment

• In buying, you need to pay a down payment, registration fees, taxes, and other tariffs.
• In leasing, you are expected to pay a refundable security deposit, first-month lease payment, an acquisition fee, registration, taxes, and only some dealers ask for a down payment.

Monthly payment

• In buying, the loan payment is high because you are charged the total vehicle price along with interest and other charges.
• In leasing, the lease payments are low because you are paying for car depreciation during the lease term along with interest and other charges.

Early termination

• In buying, you can trade or sell the car at any time. The money from the car sale can be used to pay the remaining loan.
• In leasing, an early lease is costly because you are breaking the contract. You have to pay a high penalty for early termination.

Vehicle return

• In buying, you have to handle the trade-in or selling of the car if you desire a new model.
• In leasing, you have to return the car at lease-end and pay any expenses associated with excess mileage limitation or excess wear & tear before walking away.

Future value

• In buying, you possess the ownership, even if the depreciation occurs its cash value on sale down the road is yours.
• In leasing, the future value will not affect you financially. Unfortunately, you don’t have equity to use in buying another car.

Mileage

• In buying, you own the car, so you can drive for miles without any constraints. Remember higher mileage will decrease the resale or trade-in value of your car.
• In leasing, there is a mileage limitation and if you exceed the limits there will be charges to be paid in return.

Excess wear & tear

• In buying, no concerns about wear & tear but can lower resale value.
• In leasing, you are responsible for the excess depreciation and pay charges.

Term-end

• Loan conclusion means no more paying and you built equity.
• Lease end means you can buy the leased car or return and walk away.

Customizing

• In buying, you own the car so modification is allowed but ensure not to void the warranty.
• In leasing, you are not allowed to modify the car.