Should I Lease or Finance My Car?

 March 8, 2018  1:38 PM

It’s not very often that people can afford to cash out the full amount for a new vehicle. In fact, the vast majority of car-buyers usually decide to either finance or lease their car. However, these are two entirely different things.

Before you rush into your next major financial decision, consider the advantages and disadvantages of each option.


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First thing first: what’s the difference between them?


When you finance a car, you’re spreading the entire cost of the vehicle (including taxes, delivery, and fees) over specific amount of time with monthly payments. The longer you extend the term, the smaller the payments – but you’ll be paying interest for a longer period of time.


When you lease a car, you’ll still be making monthly payments only paying for a portion of the car’s total value. You pay on a monthly basis, and at the end of the lease, you have to either return the car or pay the remaining value to own the vehicle.

Which option fits your lifestyle (and wallet) better?


Monthly Cash Flow

Monthly Cash Flow | Lease or Finance | Mac James Motors

How much of your pay-check do you have leftover after your other monthly payments (like rent, student loans, etc.)?

If you’re primarily concerned with spending the least amount of money each month, leasing will likely be your preferred option. Your monthly payments will be smaller than if you’re financing a car to buy, especially if interests are high. Keep in mind though: the longer you own a car, the more you’ll end up saving by actually owning the car.

How much money do you have in the bank for a down payment?

Down Payment | Lease or Finance | Mac James MotorsAgain, if you’re concerned with upfront fees, leasing a car will cost you less than if you were to make a downpayment for a loan. Also, if you enjoy driving a different car every couple years, you’ll probably find leasing a more enjoyable alternative.

How much do you drive?

Driving | Lease or Finance | Mac James MotorsWhen you first set up a lease agreement for a vehicle, you are agreeing to pay for a certain number of miles that will be driven on the car. If you drive more than the 10,000 or 15,000 miles initially written on in the agreement, you’ll likely have to pay extra for each additional mile you log on the speedometer.

If you travel for work or enjoy road trips, buying a car to own and using financing is probably the better option.

Are you a careful driver?

Lease agreements won’t accommodate any wear and tear. Any slight knocks or bumper scratches will cost you, so if you know you’re not the most observant person… leasing may cost you quite a bit in the long run. Opt for owning your own vehicle that you can drive however you please.

How long are you planning on keeping the car?

Keeping the Car | Lease or Finance | MacIf you only want the car for a one or two years, leasing is probably the most convenient option (especially if you want to avoid owning a depreciating asset for such a small period of time). Make sure you have a good idea for how long you want to drive the car though, because trying to get out of your lease agreement early will cost you quite a bit of money.

If you’re looking for a vehicle that’ll serve you for the next five years, it makes a lot more sense to opt for financing and actually purchase the car. It’ll be cheaper in the long run. PRO TIP: Try to pay off your loan as quickly as possible so that you’re net payment including interest is as low as possible.

Made your decision? Ready to buy your next car? If so, don’t even waste a heartbeat worrying about if you’ll be approved. Mac James has you covered, no matter what your situation is. Start here today.

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