Leasing vs. Financing: What You Need to Know

Buying a new car can be incredibly exciting. But before you head to the dealership, it's essential to decide whether you want to buy, lease, or finance your new ride. Each has its own set of pros and cons, and some may be easier on your budget than others.

In this guide, we'll break down the differences between leasing and financing so you can determine which option best suits your needs.

How Does Financing Work?

Financing means taking out a loan to cover part of the car's cost, which you'll pay off over time. Whether you choose to buy or finance, the car is yours to keep for as long as you like.

Here's how financing works: you make a down payment and then borrow the remaining amount with a loan. Your interest rate will depend on your credit score. You'll pay the principal and the interest each month until the loan is paid off. As you make these payments, you're building equity in the vehicle.

Once you've fully paid off your auto loan, you become the official owner of that car. You can keep it or sell it whenever you choose

Benefits of Financing

Financing makes sense for many drivers, especially those who are not overly concerned about having the latest models. Here are some advantages:

• No Mileage Restrictions: Unlike leasing, which limits your mileage, financing allows you to drive as much as you want without worrying about penalties.
• No Wear-and-Tear Fees: Since it's your car, there are no additional charges for everyday wear and tear.
• Flexibility: You can sell or trade-in your financed vehicle whenever you want. The cash from the sale can help with your next car's down payment.

Drawbacks of Financing

Financing also has its downsides. Here are a few things to consider:

• Higher Monthly Payments: Financing typically means larger monthly bills than leasing, which might strain a tight budget.
• Limited Options: Since buying often requires a higher upfront cost, it can limit the types of cars that are financially accessible.
• Maintenance Costs: If something breaks or needs servicing while financing the vehicle, those expenses come out of your pocket.

How Does Leasing Work?

Leasing allows you to drive a brand-new car for two to three years. You start with an upfront payment covering fees and taxes, followed by monthly lease payments throughout the lease term. Keep in mind that there are limits on how many miles you can drive during your lease.

Since lease payments are generally lower than financing payments, this option can give you access to fancier vehicles that might be out of reach if you were buying outright.

At the end of your lease, you can either return the car for another new one or buy it outright. Remember that there's usually less flexibility when negotiating lease terms than when purchasing directly.

Benefits of Leasing

If you're looking for an affordable way to get into a new vehicle, here are some reasons why leasing might be the right choice:

• Lower Monthly Payments: Leasing typically offers cheaper monthly payments than buying.
• Maintenance Covered: Most leased vehicles come with full warranties that cover most repairs during the lease period.
• Access to New Models: Leases end every few years, so you'll always be driving a newer model equipped with the latest technology.

Downsides of Leasing

Leasing has its drawbacks as well. Here are some potential downsides:

• Mileage Limits: Most leases cap your mileage each year (usually between 10,000 and 15,000 miles). Exceeding this limit could lead to extra charges.
• Wear-and-Tear Penalties: When returning your leased vehicle at the end of the term, you may face inspection fees for any noticeable damage.
• No Ownership: A significant downside is that you don't build any equity. Once the lease is up (unless you choose to purchase the vehicle), you're back to square one. Also, keep in mind that if you frequently lease vehicles instead of eventually owning one, the costs can add up over time.
• Penalty for Early Lease Termination: Ending your lease early could also result in expensive penalties.

Finance or Lease Your Next Vehicle in Topeka, KS

Are you thinking of financing or leasing a vehicle in Topeka, KS? Call Briggs Subaru of Topeka to speak to our finance experts. We also invite you to browse our extensive selection of new and used vehicles.