Lease vs Finance

Finance & Leasing Center

Leasing vs. Financing: What Are the Differences?

At South Oak Jeep Dodge Chrysler RAM, we know there is a lot to consider when shopping for a new vehicle, and we’re here to make the decision as easy as possible. Leasing or financing a car each has its benefits. Explore the differences to determine the best option for you.

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What is Leasing a Car Vs. Financing it?

Lease: You pay for only the amount of vehicle you plan on using over a shorter term than a purchase while avoiding the risk of depreciation.

Finance: You take out a loan, and you own the vehicle outright once it’s paid back.

Calculator and Bills
How Are Monthly Payments Made?

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.

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What Are the Upfront Costs?

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.

Does Mileage Matter?

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.

Pay Off
Can I Pay Off a Lease or Loan Early?

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.

Car Keys
Who Owns the Vehicle?

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.

What is the Biggest Difference?

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.

Lease or Finance Your Vehicle at South Oak Jeep Dodge Chrysler RAM

When you’re ready to lease or finance your next vehicle, choose South Oak Jeep Dodge Chrysler RAM in Matteson, IL. We have a friendly, no-pressure sales team to help make your dream car a reality. Contact us today to get started!

South Oak Jeep Dodge Ram Chrysler 41.5070226, -87.7268789.