Are you not sure if Leasing or Buying a vehicle is right for you?

Most consumers are more familiar with the car buying process vs. leasing. Leasing appeals to individuals who use cars for business, need a car for a limited period of time, trade-in their cars at regular intervals, want to know their monthly costs in advance, or want to invest their cash in different activities. Leasing, however, is very different that purchasing a vehicle. The following table provides an overview of the comparison between leasing and buying.

Leasing a Car Buying a Car

Monthly payments are applied to depreciation, not the purchase price of the vehicle

Monthly payments are applied to purchase of vehicle

Monthly lease payments are significantly lower than car loan payments

Monthly payments include financing charges

A down payment often isn’t required

Down payment usually is required

After the lease period is over, you need to lease another vehicle

When the car loan is paid, you own the car

Exiting the lease early may require a payment of any remaining balance

Early termination penalties vary

You can modify your car any way you want such as painting, accessories, etc.

You must predetermine how many miles you drive per year

No mileage restrictions; however, higher mileage reduces the trade-in value of the car

Your vehicle usually is covered by the manufacturer’s warranty for the duration of your lease

Car loans usually extend past the warranty period, so you’ll be responsible for repairs

You have to pay for any excess wear and tear and any mileage that goes over the pre-determined amount identified

Although you have maintenance and upkeep requirements, performing routine tasks is a good idea

Be sure to calculate the differences between purchasing and leasing before visiting a dealer. CUDC has created this helpful Lease vs. Buy Calculator to help you understand the financial impact of both options.

In some cases, participating CUDC credit unions can help consumers lease used vehicles. If you are interested in leasing a used car, find out more about leasing in this helpful brochure:

Understanding Your Vehicle Lease



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