LEASING VS. FINANCING
With a car loan, you are agreeing to buy a car. The best way to describe a lease is that you are merely renting a car. Once you satisfy all the payments on your car loan loan, you in fact own your car. But, when all the payments are made on a lease, you own nothing.
Who Should Lease?
If you are a small business owner, or use your vehicle exclusively for business, leasing may be a good idea for its tax advantages. Leases are tax deductible.
Leasing a car also enables individuals to drive a car that they could not normally afford. The only financial advantage of leasing for anyone (other than business use) is that state sales tax need only be paid once a month, as it's based on the amount of each monthly lease payment. If you buy a car, it must be paid all at once and is usually rolled into the loan.
Major Disadvantages of Leasing:
When you lease a car you have all the responsibilities of ownership, with none of its advantages. The car is owned by the finance company, yet you are accountable for maintenance, repairs and insurance. When you lease a car you are also limited in the number of miles you can drive. Most leases only allow you to drive 15,000 miles annually. If you exceed this number, you'll end up having to pay the finance company a significant amount of additional money.
Before you decide to lease a vehicle, we recommend that you try the car loan calculator to determine what your payments would be if you decided to finance the vehicle instead. Many people think that leasing is cheaper when in fact car loans are quite affordable. We do not recommend leasing at all. The bottom line is that once all of the fees are added up, you'll pay less to buy a new car you'll own than to lease a car you won't.
