|
LEASE
|
|
BUY
|
|
Ownership
|
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
|
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
|
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
|
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
|
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
|
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
|
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.
|
|
Excess
wear
|
Excess
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
|
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.
|
