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FINANCING OPTIONS TUTORIAL

The major difference between buying and leasing is the owner of the vehicle.

When you buy, you are the owner and your name is listed on the title
When you lease, the leasing company is the owner and their name is listed on the title

Use the table below to help you choose between buying and leasing.

Buying vs. Leasing - How to Choose

	Buying / Financing	Leasing
Mileage Limits & Fees	No limits, but the value of your vehicle declines with higher mileage	Mileage limitations with a charge for excess mileage above your lease agreement (usually 12,000 - 15,000 miles per year)
Deposits & Fees	Security deposit not required	Lease may require a security deposit, acquisition and termination fees, and other similar charges
State & County Sales Tax	Paid on the entire price of the vehicle In some states, you can deduct the net value of your trade-in	Generally paid only on the payments you make on the lease In some states, you pay on the entire sales price
Monthly Payments	Higher (compared to leasing for the same number of months) Why? You're paying for the entire vehicle over the term of your contract	Lower (compared to financing for the same number of months) Why? You're not paying for the entire vehicle over the term of your agreement
Special Incentives	Dealers and vehicle manufacturers may offer: Rebates Low rate financing	Dealers and vehicle manufacturers may offer: Low lease payments on certain models
Gap Protection	Typically available for purchase at an additional cost	Often included as a standard feature of the lease - otherwise available at an additional cost
Trade In / Turn In	As owner, if you wish to dispose of your vehicle, you are responsible for selling or trading it in You have the risk of the vehicle's market value when you trade or sell it	With leasing, you return the vehicle at the end of the lease, paying only for excess mileage, excess wear and tear, and other charges you agreed to when you leased the vehicle
Cost vs. Convenience	May be less convenient, especially if you intend to trade often Could be less costly if your intended use means higher mileage or greater wear and tear	May be more convenient, especially if you intend to trade often Could be more costly than buying, particularly if you would otherwise keep the vehicle a long time
Vehicle Warranty	Will usually expire before most people pay off their finance contract	Often remains in force for most or all of the typical shorter term leases.
Repairs & Maintenance	Owner chooses when and what to repair or service	Lease agreement Requires lessees to make repairs and regularly service the vehicle (oil changes, tire rotation, etc.)



Jump to:
1.	Introduction	10.	Length of Financing
2.	Your Financing Options	11.	Leasing Through the Dealership
3.	What You Need to Know About Options	12.	How Mileage Affects a Lease
4.	Financing and Leasing Glossary	13.	Wear, Tear, and Maintenance
5.	Understanding Finance Terms	14.	When a Lease Expires
6.	Understanding Lease Terms	15.	Buy vs. Lease - How to Choose
7.	Payment Options	16.	Buy vs. Lease - An Exercise
8.	At the Dealership	17.	How Lease Payments Differ
9.	Financing Through the Dealership	18.	Exercise Your Options - A Quiz

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Buying vs. Leasing - How to Choose?