Buying vs. Leasing

 

When it comes to buying or leasing a car the options can be confusing. To help you make an informed decision we have provided the information below. We hope you find it informative and useful.

When you buy the new or used car you pay for the entire cost of the vehicle over the term of a loan. When you lease the new or used car, you pay for only a portion of the vehicle's cost, which is the part you use during the time you are driving it.

Whether you pay for the car with cash, or finance it and make monthly payments, either way it's yours. Of course, if you're financing it, you'll have to meet the obligations the lender requires, like a certain down payment amount and timely monthly payments. If you don't, they have the right to repossess it.

 

If you're financing it, the bank will probably request a down payment. You can also trade-in another vehicle and use any equity towards your down payment. The amount of the down payment is usually based on the lender's requirements and your credit score.

Your vehicle will be worth whatever you can sell it for in the future and that depends on how well you maintain it. (Be smart and protect your investment with regular scheduled maintenance by a factory-authorized facility!)

Once you've paid off what you owe on your contract, that's it. Your vehicle is 100% yours. The lending institution will send you a Lien Release as proof that the vehicle is completely paid off and all yours.

 

You do not own the car when you lease. You're paying for the use of the vehicle, but the finance institution that you leased it through actually owns it. This is usually why you pay less per month in a lease than if you were to buy the car. This is like buying a used car only you are buying the first half and not the last half.


When a vehicle is leased and involved in an accident as long as the vehicle is repaired by an authorized body shop the Bank takes on the diminished value (should there be any), however when financing the bank has no concern over your resale value. Once you pay your loan off the car is yours no matter the value. 

Leases often do not require any type of a down payment. All you usually have to pay is the first month's payment, a security deposit, the acquisition fee and other fees and taxes. But, as with a purchase, if you want to lower your monthly payments you can always pay more upfront. Cash down in a lease makes the monthly payment decrease much more as you only financing a small percentage of the total cost.

In most leases you don't end up owning it so you don't end up selling it. That's the financial institution's job. Although you may have mileage limits and wear and tear guidelines that, if you exceed them, could cost you extra money when you turn your vehicle back in.

Most people return the vehicle at the end of the lease term. But some like to purchase it during their lease or at the end. Others like to trade it in before their lease is over. You may trade a lease prior to your lease end just like when you finance, there is simply a payoff plus you're residual.

The best cars to lease are those with the best book value after the term of the lease. Toyota has some of the highest resale and cost of ownership so they are easy to lease with low payments, since they depreciate less, you pay less.

 

At lease end you can choose to Keep the vehicle and finance or pay off the residual in cash, you can trade the vehicle in, or you can drop it off and let the finance company deal with selling it.(the finance company assumes all liability if the vehicle sells for less than the residual amount)

Also in some cases the finance company will allow you to simply keep making your lease payments for another 6 months or a year if you haven't decided what you want to do.

We are dedicated in supplying you with all the information you will need to make an informed decision when it comes to your next vehicle purchase, come in and speak to one of our Loan/Lease specialists today.

*Residual, Guaranteed future value.

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Contact

Webb Toyota

3701 E Main St
Directions Farmington, NM 87402

  • Sales: (505) 327-5900
  • Service: (505) 516-0495
  • Parts: (505) 327-5030

Hours

  • Monday 8:00AM-6:00PM
  • Tuesday 8:00AM-6:00PM
  • Wednesday 8:00AM-6:00PM
  • Thursday 8:00AM-6:00PM
  • Friday 8:00AM-6:00PM
  • Saturday 8:00AM-6:00PM
  • Sunday Closed