South Dade Kia Homestead Buying vs. Leasing Information
Buying vs. Leasing a Car
Understanding Buying vs. Leasing
To make a smart choice about buying or leasing a vehicle, it's important to consider how it fits with your finances, lifestyle, driving habits, and preferences.
BUYING
Who Owns It
When you buy a car, you can either pay cash upfront or make monthly payments through financing. Either way, the car belongs to you.
If you finance, you'll need to meet certain obligations set by the lender, like a down payment and timely payments. If you don't, they can take back the car.
Most people don't have enough cash to buy a car outright, so they finance through a dealership, bank, credit union, or private lender. The lender covers the car's cost plus interest over a period, usually three to six years, based on your income, credit score, and the car's cost.
Upfront Costs
When financing, the bank might ask for a down payment as security. This should be 10% to 20% of the car's price to secure the purchase and lower your monthly payment.
You can also trade in another car and use any value toward your down payment. The amount usually depends on the lender's rules and your credit score.
Future Value
Cars lose value over time. In the first year, a car can lose nearly 20% of its value. This depends on its make, model, and year.
Despite losing value, buying a car helps build equity if your payments exceed the rate of depreciation. You can use this equity toward your next car.
Your car's future value depends on how well you maintain it, so regular maintenance is important.
End of Payments
Once you finish paying off your loan, the car is all yours. The lender will send you a lien release as proof that you've paid off the loan.
LEASING
Who Owns It
When you lease a car, you don't own it. You're basically renting it from a finance institution. They own the car, and you pay to use it. That's why lease payments are often lower than buying payments.
Leasing also shields you from unexpected drops in the car's value. For instance, if the car you leased loses value due to a recall, you won't bear the brunt of it like you would if you owned the car.
Upfront Costs
Leases usually don't demand a down payment. Typically, you just need to cover the first month's payment, a security deposit, an acquisition fee, and other charges. However, similar to buying, if you want to reduce your monthly payments, you can opt to pay more upfront.
Future Value
In most leases, you won't own the car in the end. Therefore, you're not responsible for selling it afterward; that's the finance institution's duty. However, you might face mileage limits—typically between 12,000 and 15,000 miles per year—and wear and tear guidelines. Exceeding these limits could mean extra costs when you return the car.
Most lease terms last between two and three years, which appeals to those who enjoy driving a new car frequently. Leasing can also let you drive a nicer car for less money, especially if you can only afford a lower-priced car.
End of Payments
Most people return the car when the lease term ends, but some prefer to buy it during or at the end of the lease. Others may trade it in before the lease ends. Before signing any paperwork, ask about these options, and we'll ensure your lease is set up as you prefer.
Best Cars to Lease
The best cars to lease are those with high book values after the lease ends. Since they depreciate less, you end up paying less. Check lease ratings to find out which cars hold their value better.
Buying vs. Leasing: Which Is Right for Me?
Shopping for a new car is always exciting, but it can be difficult to choose between buying and leasing a vehicle. If you're on the fence over buying or leasing, talk to a car dealership near you to discuss your options. They'll go over each option and help you find a form of payment that makes the most sense for your financial situation.
The finance center at South Dade Kia Homestead offers a variety of leasing and financing options for the brand-new Fords and used vehicles in our inventory. If you're ready to lease or buy your next vehicle, contact us online.