The Benefits and Differences Between Buying and Leasing a New Car

Growing up the daughter of a used car dealer, it was instilled into me that you always buy a car - a used car - because it’s the best investment for your money.  From age 16 until now (I’m 26), I’ve had 5 different cars...all used of course.  And they truly were good investments.  I bought them at a great price (thanks to dad) and I was able to sell them in a few years and get back almost what I paid for them.  It worked for me and it works for a lot of people.  

Now that I work at a new car dealership, the temptation of a shiny new car is always around me.  I decided to step out of my comfort zone and lease a new Fusion.  It was pretty terrifying at first, I’m not gonna lie, but once I sat down and thought through the logistics I felt a lot better.  Next to your house payment, most peoples’ highest monthly payment goes to their car - so obviously it’s a huge investment and shouldn’t be taken lightly.  Each option has benefits, and each option would be appealing to different people for different reasons.  If you’re like many car buyers who haven’t tried leasing, you may not truly understand how it works and what it has to offer.  Continue reading.

Payment:  When a payment is figured on a lease, the dealer is basing it on what’s called a “residual” value, or what the manufacturer determines the vehicle to be worth at the end of the term of the lease.  So if it's not worth what you can buy it for, you're protected to not have to own it. Therefore the payment is generally lower because you’re paying on a percentage of the vehicle as opposed to when you purchase a car, you’re paying on the entire amount of the vehicle.  

Warranty:  On a short term lease, you’ll be under the full warranty for the entire duration of your lease.  On a purchase, depending on how long you keep your car, you’ll be under the manufacturers warranty until it expires and then you’ll be responsible for any repairs from that point forward.

Options:  When your lease expires, you have 3 options.  1. You can lease a different car.  You’ll start over with the full warranty plus you’ll have the latest and greatest of what’s out there.  2. You can purchase the car you just finished leasing.  Maybe you really love the car and don’t want to see it go - then just buy it!  You’ll pay the value that was locked in at the beginning of the lease (the purchase option price).  3. You can simply walk away.  Maybe you decided you didn’t want to lease again and just wanted to go in a different direction; it’s all good!  When you purchase a car, you will pay for it until you’ve satisfied your loan and then it’s all yours.

So like I said earlier, both leasing and buying has its advantages and each one appeals to different buyers.  Talking to a sales professional about your options is always a good idea.  After all, it’s what they’ve made their career out of and they can give you all the information you need to make a well informed decision.

So whether you decide you want to lease a new car, or purchase a new or used one, all of us at Fred Martin Ford are eager to help you drive away with your perfect vehicle!