Buying and leasing are just two different types of auto financing to achieve the same thing: getting the customer a new car. One is used to finance the purchase of the vehicle - meaning the customer has ownership and the other is used to finance the use of the vehicle over a period of time.
No option is better than the other but each option will fit your needs in different ways. When you look beyond the financial comparisons of buying and leasing you'll see a whole list of questions about your priorities:
- Do you find comfort in knowing that for 2-3 years you won't be responsible for paying for major repairs due to components breaking down? If so, then leasing may be right for you.
- Do you like to drive your car for 5-10 years so you get maximum value for your purchase? If so, then buying may be right for you.
- In a typical year, do you drive 15,000 miles or more? Do your friends call you a "Road Warrior"? Road Warriors are typically better off buying rather than leasing.
- Are you part of the military and anticipate being sent overseas in the next 2 years for a long-term deployment? If that's the case then leasing may be your best option.
- Finally - from a financial perspective, do you need the lowest payments possible at this point in your life? Leasing typically offers lower monthly payments when compared to buying.
What happens when my payments are over?
When you buy a car, you own it without a lien after you've completed all of your payments. You can do with the car what you wish at that point without fear of having to make more payments. When your lease term is up you typically have five options:
- Buy it and keep the vehicle
- Buy it and sell the vehicle at a profit (assuming the market value is above the residual value)
- Buy the vehicle and then trade it in for another vehicle, either new or used (again assuming the market value is above the residual value)
- Extend the lease and continue to drive it
- Return the vehicle to the dealer with no resale or trade-in hassles and then make the decision if you want to buy or lease a new car.
Which option is best for you? The team at Liberty Toyota in Colorado Springs (just off of Woodmen near Powers) is happy to discuss the options with you and we'll give you our professional opinion if you're not sure.