Subaru White Plains Buying vs. Leasing Advice
Buying vs. Leasing a Car
Understanding the differences between buying and leasing is key to making an informed vehicle purchasing decision that makes the most sense for your finances, lifestyle, driving routine, and personal preferences.
The following compares the pros and cons of buying and leasing, the economics of each, and why you might choose to finance one way or another.
BUYING
Who Owns It
You can obtain ownership of a car either by making a cash purchase or opting for financing with monthly payments. Regardless of the method, the vehicle becomes your property.
If you choose financing, you must fulfill certain obligations stipulated by the lender, such as a specific down payment and punctual monthly installments. Failure to meet these obligations grants the lender the authority to reclaim the vehicle.
Many individuals lack the financial means to pay the entire vehicle cost upfront, leading them to finance through various channels such as dealerships, banks, credit unions, or private lenders. This financing covers the vehicle's value plus interest over an agreed-upon period, typically ranging from three to six years.
Lenders evaluate factors like your income, credit score, and the vehicle's cost to determine loan terms and interest rates. Following negotiations and paperwork completion, the vehicle becomes yours to utilize as you wish.
Upfront Costs
When financing a car, the bank usually requires a down payment for security purposes. Typically, this down payment should fall within 10% to 20% of the vehicle's Manufacturer's Suggested Retail Price (MSRP), thereby securing your purchase and reducing monthly payment amounts.
You may also opt to trade in another vehicle and apply any equity towards your down payment. The down payment amount is generally influenced by the lender's criteria and your credit score.
Future Value
New cars experience depreciation over time, with nearly 20% of their value diminishing within the first year of ownership, as reported by Trusted Choice Insurance. The rate of depreciation varies based on factors such as market value, make, model, and manufacturing year.
Despite depreciation, purchasing a car serves as a means to accumulate equity, provided that your payments exceed the rate of value decrease. This equity can be utilized towards the purchase of your next vehicle when the time comes.
The future value of your vehicle depends on its condition, which emphasizes the importance of regular maintenance from a factory-authorized facility to safeguard your investment.
End of Payments
Upon complete payment of your contract obligations, the vehicle becomes entirely yours. The lending institution issues a lien release as confirmation of full payment, signifying that the vehicle is now solely under your ownership.
LEASING
Understanding Ownership in Leasing
When you lease a car, ownership differs from buying. You're essentially paying for the vehicle's use while the finance institution retains ownership. This arrangement often translates to lower monthly payments compared to purchasing.
Advantages of Leasing
Leasing shields drivers from unforeseen depreciation, such as through recalls, as the responsibility lies with the owning institution. Upfront costs are typically minimal, usually involving the first month's payment, a security deposit, acquisition fee, and taxes. Additional upfront payments can lower monthly costs.
Considerations for Future Value
Most leases don't culminate in ownership, sparing lessees from the hassle of selling. Mileage restrictions and wear and tear guidelines may incur extra costs upon returning the vehicle. Leases typically span two to three years, appealing to those desiring new cars periodically or seeking more car for less money.
End of Lease Options
At the lease term's end, options include returning the vehicle, purchasing it, or trading it in. Consulting with us before finalizing paperwork ensures your lease aligns with your preferences.
Choosing the Right Cars to Lease
The best cars to lease retain higher book values post-lease, resulting in lower costs. Researching lease ratings can help identify these vehicles.
Decision: Buying vs. Leasing
Choosing between buying and leasing can be daunting. Our dealership can guide you through the options, tailoring a solution to your financial circumstances. At Subaru White Plains's finance center, we offer a range of leasing and financing choices for both new and used vehicles. Reach out to us online when you're ready to lease or buy your next vehicle.