That’s a very good question, hypothetical person! Thankfully, we’ve got a good answer for you. The short version is: both are sound options, with their respective upsides. But the one which is right for you really depends on your lifestyle.
The long answer…
Leasing is a great option for people who mostly need a vehicle for commuting, want to be able to drive a new car every few years, or are working with a more limited budget (or any combination thereof).
The main benefit of leasing is the lower cost. You work out a term with the leasing company, and you are given a vehicle to drive over the course of the lease. Because you aren’t paying for the full price of the car, your monthly payments will be lower, and you’ll only be paying up until the end of the term. Repair costs will also be kept down, because you’re assured the vehicle is covered under warranty, and you’ll be returning it before the warranty expires. Once the lease is up, you have two options. Your first option is to return the vehicle, and most likely work out a new lease to drive off with a newer vehicle containing the latest features. If, however, you really liked the vehicle you were driving, you’ll usually have the option to buy it, most often by paying out the remaining cost of the vehicle (rent-to-own, essentially). Financing options would be available at that time, too.
“This sounds great,” you think to yourself, “but what’s the catch?” The main catch is, you don’t own the vehicle, the leasing company does. This means you can’t, say, modify the vehicle with accessories, or paint it hot pink. If you really want your flamingo car, you’ll have to consider financing. This also means you can’t sell the vehicle—it isn’t yours to sell. Second, most leasing companies want you to keep their vehicle in good shape—that means you’re expected to keep regular on the maintenance, and they don’t want you racking up too many kilometres on the odometer. Most leasing companies will set a limited number of kilometres you’re allowed to drive per year, and will charge you extra if you surpass it. If you expect you’ll be hitting the highway fairly often, or are planning lengthy family road trips, leasing might not be the best option. Oh, and if you think you might be moving soon, don’t lease a vehicle. The company will want you to be able to return the vehicle when the lease is up, and skipping town with it isn’t a good look (and is most likely going to be against the rules of your lease.)
Financing is a better option if you want the freedom of ownership, expect you’ll be doing a lot of driving over the long-term. You’ll also be able to resell your vehicle.
Because you own the vehicle outright, it’s yours to do with you as you please. Finally, you can have your flamingo car! Paint it however you want, modify it to suit your needs, and drive it right into the ground—it’s yours. You can maintain it as you see fit, as no one cares if you let it get rundown. You can pack up and move to Wisconsin and no one will send a collections agency after you. You can also sell the vehicle at your leisure, because it’s yours. Best of all, you get the equity from the vehicle after you’ve totally paid it off—any additional value you get from it after that point is money in your pocket!
“But there’s obviously a downside to financing, too, right?” There sure is, rhetorical question, thanks for asking! The freedom of ownership can also be the burden of ownership. All the repairs and maintenance on the vehicle is on you, and later in your vehicle’s life those bills can start to add up. You’re also on the hook for a lot of those costs once your warranty expires. You’re also stuck if the vehicle you purchased until you sell it—there’s no trading up to a newer model every few years. Unless you’re filthy rich, at least. Oh, and unless you’re filthy rich you’ll also be looking at higher monthly payments, because you’re paying for the whole vehicle (as well as the interest on your auto loan).
Argh! I Can’t Decide!
Calm down, section headline, we’ve got your back! Southtown Chrysler has a whole team of dedicated, friendly financial professionals on hand. Our finance team is happy to walk you through both options, and help you make an informed choice on which one might be right for you. Once you’ve decided, they’re also ready to walk you through the leasing or purchasing process step-by-step, to make it as easy as possible.
Don’t wait! Book a free financial consultation today, and take the first step toward owning your next Chrysler, Dodge, RAM or Jeep!