 |
|
Ownership |
| LEASING: 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. |
BUYING: You own the vehicle and get to
keep it at the end of the financing term. |
| Up-front costs |
| LEASING: 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. |
BUYING: Up-front costs include the cash
price or a down payment, taxes, registration and other fees, and other
charges. |
| Monthly payments
|
| LEASING: 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. |
BUYING: 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 |
| LEASING: You are responsible for
any early termination charges if you end the lease early. |
BUYING: You are responsible for any
pay-off amount if you end the loan early. |
|
Vehicle return
|
| LEASING: You may return the vehicle at
lease-end, pay any end-of-lease costs, and "walk away." |
BUYING: You may have to sell or trade
the vehicle when you decide you want a different vehicle. |
| Future value |
| LEASING: The lessor has the risk
of the future market value of the vehicle. |
BUYING: You have the risk of the
vehicle's market value when you trade or sell it. |
| Mileage |
| LEASING: 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. |
BUYING: You may drive as many miles as
you want, but higher mileage will lower the vehicle's trade-in or
resale value. |
| Excessive wear |
| LEASING: Most leases limit wear
to the vehicle during the lease term. You will likely have to pay
extra charges for exceeding those limits if you return the vehicle. |
BUYING: There are no limits or charges
for excessive wear to the vehicle, but excessive wear will lower the
vehicle's trade-in or resale value. |
| End of term |
| LEASING: 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. |
BUYING: At the end of the loan term
(typically 4-6 years), you have no further loan payments. |
