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CAR LEASING:
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CAR BUYING:
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The car is not yours, you just rent it. When the lease expires
you have the choice of returning the car or buying it.
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The car is yours and you get to keep after it's paid off.
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Your lease payments are generally lower each month than loan payments because only for the vehicle's depreciation during the lease term, plus rent charges (like interest), taxes, and fees are being paid for.
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Loan payments each month are most often higher than lease payments because you're paying for the entire purchase price of the car, plus interest and other finance charges, taxes, and fees. The larger your down payment, the smaller your payments each month.
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You're responsible for any early termination charges if you end the lease early.
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You're responsible for any pay-off amount if you end the loan early.
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You may return the car at lease end, pay any end-of-lease costs, and "walk away."
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You may have to sell or trade the vehicle when you decide you want a different vehicle.
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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.
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You may drive as many miles as you want, but higher mileage will lower the vehicle's trade-in or resale value
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Most leases limit wear to the car during the lease term. You will likely have to pay extra charges for exceeding those limits if you return the vehicle.
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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.
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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 car.
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At the end of the loan term (typically 3-5 years), you have no further loan payments.
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