Lease vs Purchase: What's Best For You?
Purchase Details.
Conventional purchase is how many in America acquire their vehicles, but there are also automobile leasing options available for those who prefer flexibility. The buying process generally occurs as follows:
1. Choose the new or pre-owned vehicle you want.
2. Pick the term you desire. The average finance term for new and pre-owned vehicles through the end of 2024 in the U.S. is 74.6 months.*
3. The average down payment for a new and pre-owned vehicle is $1,951.68 (note: plus taxes, title, and license).
4. The average monthly payment for most 5-7 passenger vehicles is now over $1,000, especially for vehicles priced above $50,000.
5. However, the average time of ownership is 3.73 years, which often creates a disparity between what you owe on your vehicle and its market value. This situation is commonly referred to as being in a 'negative equity position' or being 'upside down,' which can lead to keeping the car longer or requiring larger amounts of money down to offset the shortages. Alternatively, exploring vehicle financing options can provide different pathways to ownership.
What if there was another way to get a vehicle based on your buying cycle and have options?
Now let's compare automobile leasing to a purchase based on the time of ownership and down payment you want, keeping your equity position in mind. *Please note, leasing options are not for everyone; however, many people find that vehicle financing through leasing fits their buying needs equally or even better than a purchase.
How Does A Lease Work?
Choose the new or certified pre-owned vehicle you want. While many certified pre-owned options are available for automobile leasing, please note that some restrictions apply. For more details on leasing options and vehicle financing, click on 'Contact Us.'
Then..After Picking the Vehicle You Want, Here Are the Next Steps:
1. The bank determines how much the vehicle you want is worth for the time you intend to keep it, generally 2, 3, or 4 years, as part of your automobile leasing agreement.
2. You only pay on the difference between what you purchase the vehicle for plus taxes, title, and fees, and the value stated in the lease contract at the end of the lease. Please note that factors like down payment, trade-in equity or inequity, type of vehicle, and credit can affect your payment in vehicle financing.
3. At the end or 'end of term' of your lease, you have 3 options:
a) Like a purchase, you can trade your vehicle in. The amount you will owe is predetermined at the time of the lease signing and is written into your lease contract.
b) Like a purchase, you can continue paying the amount due at the end of your lease term until you pay it off (some rules apply; for more info, click 'Contact Us' for more details).
c) Unlike a purchase, you can turn the vehicle in to the dealer you leased it from and pay a $395 disposal fee. Please note that if you choose this option, you will be subject to mileage limitations that will be determined at the time of the lease. Additionally, the bank allows for normal wear and tear; however, anything beyond that will need to be fixed before turning it in. For more information, please click 'Contact Us.'
So, In one Sentence, Let's Wrap It Up. Should I Lease?
Automobile leasing can provide you with the vehicle you desire at payments you can afford, allowing you to keep it for the duration that's right for you. With leasing options, you can enjoy payments that are 20-30% less than traditional vehicle financing.
Lease Objections..."Well What If? :
What if I drive a lot of miles each year? What if I want to explore ownership options? What if I want to add accessories, lift wheels, and tires, or more? What if I don't have any money down—can I still lease? What if I don't have the best credit? What if I don't see the vehicle I want—can you help me find one?
Find answers to these automobile leasing questions and more by clicking the 'Lease Objections' tab to explore various leasing options and vehicle financing solutions.