Lease vs Finance

Lease: Monthly payments are made to a lender or bank, just like a financed car. Lease payments are typically lower than finance payments because you only pay a portion of the vehicle’s price, plus rent charges and taxes and fees.

Finance: Monthly payments are usually higher than leasing because you pay for the entire purchase. Including interest, finance charges, taxes, and fees.

Lease: Upfront costs can be zero if you want to roll in your first payment and any taxes or fees. Putting down an extra $1,000 could lower your monthly payment by as much as $25-$30.

Finance: Upfront costs can be zero if you qualify. However, in some situations, lenders may require a down payment.

Lease: If you drive over the allotted mileage stated in your lease, you may be charged an extra fee per mile. If you trade or purchase your leased car, you will avoid this.

Finance: There are no mileage penalties. However, how much mileage you have on the car could affect your ability to trade out your loan before you pay it off.

Lease: You may have to pay an early termination fee to cancel your lease early. However, you can trade in no differently than if you were trading in a financed vehicle.

Finance: You can pay in full at any point during the finance term without penalty.

Lease: At the end of the lease, you can either buy the vehicle outright, refinance the balance, or turn it in. If you have equity because you kept your mileage low or you have a high-demand vehicle, you may trade the vehicle in and keep the equity or apply it to your next purchase.

Finance: Once you’ve made all the payments, you own the vehicle. If you have equity, you can trade in the vehicle, and the equity will go toward your next purchase. Remember that if you owe more than the vehicle is worth, the balance will be added to your next purchase.

Lease: Leases include G.A.P. (Guaranteed Automobile Payoff) insurance, which ensures that you are not responsible for the unpaid balance in the event of a total loss. If the vehicle is worth less than the residual balance owed, you have kept the vehicle within the allowed miles, and the condition is good, you may turn it in and avoid the negative equity.

Finance: Loans are simple interest, meaning they may be paid off early to lessen interest charges.