Finance vs. Lease

What Is The Difference Between Leasing And Financing?

You have searched, test driven, and researched multiple vehicles and now that you've found the perfect new Ford car, truck, or SUV you may be curious, should I lease or loan? Both of these options are great choices. The final decision comes down to your preferences and how much money you would like to spend up front versus over time.







 

Leasing Pros And Cons

Leasing is a good option for those that want a new vehicle, but don't want to spend a lot for a down payment. You are basically renting your vehicle from the dealership and, after the lease is over, will have to bring it back and either purchase it with a loan or sign up for another lease. Here are some of the advantages and disadvantages to leasing.

Advantages

  • Normally you are required to put down a low or no down payment.
  • Monthly payments are usually less than a loan.
  • The new car warranty and available leasing warranties help to keep your repair or maintenance costs lower.
  • You will pay less in sales tax.
  • You get a brand new car to enjoy and, once the lease is over, you can sign on for another lease with a different brand new car.

Disadvantages

  • Your payments will stay consistent and won't ever end, like a loan would.
  • Most leases have a mileage limit that, if you go over, will result in a hefty fine. The average mileage limit is 12,000 miles.
  • If you ever want to switch vehicles before the lease is over, you will have to pay a termination fee.
  • Excessive wear and tear will also result in a fine.
  • You can't make any modifications or add any accessories to the vehicle because it isn't truly yours.
  • You will pay more for a lease over the long run.

Loaning Pros And Cons

Buying a vehicle is a great option for those that want to own a car, truck, SUV, or van. You will pay more up front, but over time you will end up paying less and don't have to worry about any fines that come with a lease. Here are some advantages and disadvantages to loaning a vehicle.

Advantages

  • Once your loan is paid off, the vehicle is yours and you are payment free.
  • Want to add that cool accessory or make any other modifications? Go for it, the car is yours to do as you please.
  • There are no mileage limits or fees to worry about, so take that cross-country road trip you've had your heart set on.
  • Need a different car? Sell your current one or trade it in with no termination fees involved.
  • In the long run, buying a vehicle will save you money.

Disadvantages

  • Most loans require a hefty down payment.
  • Monthly payments are normally higher than a lease.
  • Once the new car warranty expires, all of the repairs and maintenance will be on you to pay for.
  • The value of a new car depreciates as soon as you leave the lot.
  • When you are ready to sell your car, you will have to handle all of the haggling and hassles that come with it.






 

Figure Out Which One You'll Choose At Royal Oak Ford

If you still aren't sure if you should lease or loan, stop by the finance department, here at Royal Oak Ford, and have our financial experts answer your questions. We are located right here in Royal Oak, MI, and are just a short drive from Madison Heights, Southfield, Detroit, and Ferndale MI. We encourage you to stop by to see what new Ford models we have available and have our staff help you find the perfect lease or loan for your preferences and budget.


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