How is car leasing different from buying?

Answer

The following information assumes you're talking about a closed-end lease, the most common type of vehicle lease. With a closed-end lease, you may return the vehicle at the end of the lease term, pay any end-of-lease costs, and walk away.

Differences between car leasing and buying:

CAR LEASE: 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.

CAR LEASE: 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.

CAR LEASE: 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.

CAR LEASE: 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.

CAR LEASE: 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.

CAR LEASE: 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.

CAR LEASE: 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.

CAR LEASE: 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.

CAR LEASE: 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.

Answer

Leasing a car you get to drive a new car in the manufactures warrenty for less then buying a car. The only problem with leasing is the milage factor if you know your going to drive more then 15,000 per year (always get the 15,000 per year over the 12,000 its only a couple bucks more a month it could save a lot in the long run) you can always buy mile up front for about half the price if you go over at the end. Also if you go over on your lease and the end of your lease you can buy the car out for an amount figured out when you sign your lease. People say with leasing you don't own your car then. Well most people never own there cars anyways must people trade them in before there loan is up then there usually in a negative situation when they do go to buy there next car. instead leasing you just drop off keys and your done. plus you and worry free driving the whole time cause it was in the manufac. warrenty. But if you keep cars for ever or like to modify them buying is the way to go.

First answer by FRB. Last edit by Frank Rizzo. Question popularity: 240 [recommend question]

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