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When car shopping there is a question that constantly runs through the shoppers’ heads: Should I buy or lease this car?
That is followed by another question: Which one would benefit me more?
In order to help you better decide which is the best for you when looking at new or used cars, let’s take a look at the differences between buying vs. leasing. Since there are two sides to each, this will cover the positives and the negatives of both.
The car is yours. After you finish off payments you can officially say that the car is yours. Any money you make off of a resale of that car goes directly to you. Also, you will get to keep that car for as long as you want to.
Changing the car is possible. Once you have the title to the car, then you can do what you want with it. Your car can get a new paint job, add bumper stickers, change interior, or alter the engine when you own it.
Mileage restrictions do not exist. When you buy a car there is no maximum amount of miles you are allowed to drive. You can as far as you want, as little as you want, or anywhere in between.
Upgrade after a couple years. After your lease is up, you can trade in your car for a newer model. After three years, the typical length of a lease, you can trade your car in for one with more features and increased technology.
Down payments tend to be less. For leasing there are typically deals running that get you a new vehicle for $0 down. This helps for people who need a car a little quicker and are in a bind. You typically pay anywhere from $0 to a few thousand for a down payment. Just remember that the less you pay, the more you pay each month.
Warranties run out. After a certain amount of time warranties will run out. When you lease a car you often only lease the car during the bumper-to-bumper warranty and don’t have to worry about that.
Loans can last longer. If you don't do a 3-year loan, which is the typical lease rate, then you will be paying interest rates for a longer period of time. These rates will accumulate over the extra years and lead to a higher price of the vehicle.
Down payments are often higher than for used cars. When purchasing a new vehicle auto loan lenders look for roughly 10-20% for a down payment. When you buy used cars there is a chance to have a down payment of $0.
You’re basically just renting. Leasing a vehicle is basically the same as renting an apartment. You pay to have it each month, you maintain it, try not to wear it down to much, and then you give it back without earning any equity.
Credit score really matters. According to US News & World Report, “Another potential downside to leasing is that usually only shoppers with good credit scores will qualify for a car lease. If your credit score is less than perfect, you may want to consider buying a used car or waiting to lease until you can clean your credit up and increase your credit score.”
Whether you decide to lease or buy a car, Vann York Honda is here to help. Stop by one of our locations in Kernersville, Greensboro, or Winston-Salem to get the best deals on purchasing or leasing one of our new or used cars.