There are many different options when it comes to financing your next vehicle, but they all fall under two categories: buying or leasing. And for our drivers in Wakefield, Reading, and Danvers, our team at Ira Subaru has the full rundown on your buying and leasing questions.
With several different pros and cons with either option, you might be a little confused as to what will work better for your budget. Would you rather buy your car and eventually own it, or lease it and trade it in after a few years for a newer model? But that's just the start!
| Buying a Car | Leasing a Car |
| Larger down payment | Less money upfront |
| Higher monthly payment | Lower monthly payment |
| Trade-in value applied to next car | No trade in value |
| Negative equity if you sell your car before it's paid off | No potential for negative equity |
| After warranty expires, owner is responsible for maintenance | Maintenance is usually covered under warranty |
| No limit on mileage | Limited mileage according to leasing terms |
Buying vs Leasing: Which is Better?
When you're looking to finance your next vehicle, it really comes down to preference. When you choose to lease a car, you'll make payments on the vehicle until the lease term is up, and then you'll have the option to trade it in for a different or newer model, and the term restarts.
If you buy a car, you'll usually obtain a loan from a bank or private lender, and make payments for a set period until the car is completely paid off, and then the vehicle is yours, payment-free. Let's go into more detail…
Buying Pros
There are many pros to buying a vehicle. To start, you'll own it once your loan term is up, which is usually anywhere from three to five years. There's also no limit to how many miles you can put on your vehicle, and you're free to accessorize it.
Buying Cons
When you choose to buy, usually the payments are a bit higher than if you decided to lease, since you're paying for the total value of the vehicle. Plus, you're usually required to put down a larger payment upfront-which can range anywhere from 10% to 20%.
Leasing Pros
Most of the time, leasing a vehicle means lower monthly payments, which means you more than likely can afford a car that may not have been in your budget to buy. Another positive of leasing is that most terms last the duration of the warranty, so you'll be fully covered while you have the car.
Leasing Cons
Leasing a car comes with restrictions. You're allotted a certain annual mileage rate, or you can be charged an overage fee at the end of your term. Additionally, you'll always have a car payment with a lease, and won't gain any equity in the process, unless of course, you buy the vehicle out.
Learn More About Buying vs Leasing
Now that you know the basics of buying and leasing your next vehicle, you can start to think about which option would work best for your budget. Really, it comes down to personal preference-some drivers prefer to own their vehicles, while others like the idea of a consistent upgrade.
If you are in the areas of Wakefield, Reading, or Danvers, and have any other financing questions, feel free to contact us at Ira Subaru today!
