Ownership Potential
Loan
Car belongs to you and the bank (that gave you the loan) until you have paid off the loan. Then, the car becomes yours.
Lease
You are essentially renting the car from the dealership. The lease is like a rental agreement. You make monthly payments to the dealership for a set number of years. But the car does not belong to you. When the lease ends, you have to return the car to the dealership.
Car belongs to you and the bank (that gave you the loan) until you have paid off the loan. Then, the car becomes yours.
Lease
You are essentially renting the car from the dealership. The lease is like a rental agreement. You make monthly payments to the dealership for a set number of years. But the car does not belong to you. When the lease ends, you have to return the car to the dealership.
Wear & Tear
LoanNo additional costs for wear and tear in your loan agreement.
Lease
Most leases charge you extra money for any damage found at the end of the lease that goes beyond “normal wear and tear.”
Monthly Payments
Loan
Payments are higher; however, at the end of the loan, you own the car.
Lease
Payments are lower because you are not purchasing the car; the dealership still owns it. Once your lease ends, you turn the car in and the dealership can sell it or lease it to another customer. You may decide to purchase the car at the end of the lease; however, the total cost ends up being more than it would have been if you had bought the car instead of leasing it.
Payments are higher; however, at the end of the loan, you own the car.
Lease
Payments are lower because you are not purchasing the car; the dealership still owns it. Once your lease ends, you turn the car in and the dealership can sell it or lease it to another customer. You may decide to purchase the car at the end of the lease; however, the total cost ends up being more than it would have been if you had bought the car instead of leasing it.
Mileage Limitations
Loan
No mileage restrictions.
Lease
Leases restrict the number of miles you can drive the car each year. If you exceed the mileage allowed, you pay the dealer for each mile over the limit, according to your lease. For example, a dealer may charge you 15 cents for every mile that you drive over 24,000 miles in two years. If you drive the car an additional 3,000 miles, you would owe the dealer $450 for those miles.
No mileage restrictions.
Lease
Leases restrict the number of miles you can drive the car each year. If you exceed the mileage allowed, you pay the dealer for each mile over the limit, according to your lease. For example, a dealer may charge you 15 cents for every mile that you drive over 24,000 miles in two years. If you drive the car an additional 3,000 miles, you would owe the dealer $450 for those miles.
Auto Insurance
Loan
May cost more during the loan than it will after the loan is repaid because the lender may require more coverage.
Lease
Usually costs more if you lease a car than it does if you buy. Most car leases require you to carry higher levels of coverage than purchase agreements do. Some insurance carriers may also consider leasing to be higher risk than purchasing.
May cost more during the loan than it will after the loan is repaid because the lender may require more coverage.
Lease
Usually costs more if you lease a car than it does if you buy. Most car leases require you to carry higher levels of coverage than purchase agreements do. Some insurance carriers may also consider leasing to be higher risk than purchasing.
Cost
Loan
Probably will cost more in the short-term than a car lease - your total loan and monthly payments are likely to be higher. However, once the loan is repaid, the car is yours.
Probably will cost more in the short-term than a car lease - your total loan and monthly payments are likely to be higher. However, once the loan is repaid, the car is yours.
Lease
Probably will cost less in the short term than a car purchase; your total loan and monthly payments are likely to be lower. However, if you exceed the mileage on a leased car and/or decide to buy it outright once your lease has expired, it will end up costing you more.
Probably will cost less in the short term than a car purchase; your total loan and monthly payments are likely to be lower. However, if you exceed the mileage on a leased car and/or decide to buy it outright once your lease has expired, it will end up costing you more.
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