Auto Leasing or Buying? Which is the right choice for you?

It's a common dilemma: Auto Leasing or Buy, buy or lease, which is better? Everyone who has ever considered leasing has had this question cross their mind. So what is the answer?

It depends on your situation!

Leases and Loans are simply two different methods of automobile financing. One finances the use of a vehicle; the other finances the purchase of a vehicle. Each has its own benefits and drawbacks. It's not possible to simply say that one is always better than the other because it depends on your own particular situation and preferences.

You must not only look at the financial comparisons but also at your own personal priorities — what's important to you!

Is having a new vehicle every two or three years with no major repair risks more important than long-term cost?Are long term cost savings more important than lower monthly payments? Is ownership more important than low up-front costs and no down payment?

So, making the Auto Lease or Auto Buy decision is not quite cut and dry. There are some things you need to consider first.

Auto Buying and Auto Leasing are different!

When you BUY, you pay for the entire cost of a vehicle, regardless of how many miles you drive it. You typically make a down payment, pay sales taxes in cash or roll them into your loan, and pay an interest rate determined by your loan company. You make your first payment a month after you sign your contract.

When you LEASE, you pay for only a portion of the vehicle's cost, which is the part that you "use up" during the time you're driving it. You have the option of not making a down payment, you pay sales tax only on your monthly payments (in most states), and pay a money factor that is similar to the interest rate on a loan. With leases, you may also pay extra fees and possibly a security deposit that you don't pay when you buy. You make your first payment at the time you sign your contract.

Leasing vs Buying example!

As an example, if you Lease a car that costs $20,000, but is worth $13,000 after 24 months, you pay for the $7000 difference (this is called depreciation), plus finance charges, plus fees. Sometimes there are Short term leases - no money down! When you Buy a car, you pay the entire $20,000, plus finance charges, plus fees. This is fundamentally why Leasing offers significantly lower monthly payments than Buying. Get pre-approved for your loan with Harbor Credit

Auto Leasing has seen an incredible increase in popularity in the last few years. But, the majority of car shoppers don’t understand how leasing really works, and would it be right for them.

In fact, many people that are leasing right now are over paying because they didn’t know a good deal, or what was a bad deal. Other’s who could benefit greatly from leasing shy away because they don’t understand the process or the “leasing language”.

Don't be Confused by Car Leasing! Learn the Ins & Outs: from new car leasing to ending your lease.