Chevrolet Leasing Vs Buying
Chevrolet Financing Available in Columbia,TN
When it’s time to buy a new vehicle, you’ll need to decide whether to lease or buy it. Leasing and buying have advantages and disadvantages, depending on your situation. To make an informed decision, you should know the benefits and drawbacks of both options. Our Stan McNabb team would like to share the difference between leasing and buying a vehicle before you start shopping.
What Is Leasing a Vehicle?
Leasing a vehicle is similar to borrowing it from the dealership on an extended rental agreement. The dealership will tell you the mileage limit for your lease, and you’ll make monthly payments for the duration of your lease agreement. You’ll return the vehicle to the dealership when the lease agreement is up. You may have the option to buy the vehicle at that point, or you can decide to lease another car instead.
Lease payments are based on the vehicle’s depreciated value, plus interest and fees during your lease term. The lease agreement will include the following information:
- Monthly payment amount.
- Length of lease or time frame.
- Current value of the vehicle.
- Predicted depreciated value of the vehicle.
- Fees to pay at the end of your lease.
- Interest fees, rent charges, or money factor.
- Early termination fees.
- Mileage limit and per-mile overage fees.
- Missed payment penalty.
- Late payment penalty.
- Definition of normal wear and tear plus any fees associated with excessive wear and tear.
You typically need a credit score of at least 700 to qualify for a lease agreement. Scores higher than 700 will help lower your interest rate and monthly payment. You might still qualify for a lease with a lower credit score, but you should be prepared to pay higher interest rates and fees.
Advantages of Leasing a Vehicle
Leasing a vehicle can offer several advantages to specific drivers. These include:
- Lower monthly payments: Generally, lease payments are lower than those associated with financing a vehicle.
- Lower down payment: You may not be required to put down as large of a down payment for a lease versus buying.
- Top trim picks: Leasing may allow you to opt for a top trim level with high-end features for less than you’d pay to purchase the exact vehicle.
- Latest model year: You can drive the newest model year without the high payments when you lease instead of purchase.
- Warranty: A leased vehicle is usually still under the original manufacturer’s warranty.
- Hassle-free return: When your lease is up, you return the vehicle to the dealership; you don’t have to go through the hassle of selling it or trading it in.
Disadvantages of Leasing a Vehicle
Leasing a vehicle isn’t for everyone. Some of the disadvantages include the following:
- No vehicle: You no longer have a vehicle when your lease is up.
- No customizations: A leased vehicle doesn’t belong to you, so you may not be able to add any customizations without risking a penalty fee.
- Hard to break: Breaking a lease can be challenging and expensive.
- High depreciation: Vehicles depreciate the most when new, which is the part of the depreciation you’re paying on a leased vehicle.
- Higher costs: You may pay more in the long run for a leased vehicle versus holding onto a vehicle for years to come.
What Is Buying a Vehicle?
You can buy a vehicle for a cash price or through financing, but either way, you own the vehicle outright. You can acquire financing through your financial institution or many dealerships if you don’t have the cash needed to buy a vehicle. The financing provides you with the money to purchase the car by agreeing to pay back the borrowed amount over a set term at an agreed interest rate. Most lenders will also require a down payment or trade-in on the vehicle’s purchase price.
Your credit score affects the interest rate of your auto loan, with higher credit scores receiving the best rates. Auto loans can be set for 12 to 84 months, depending on the age and price of the vehicle. The loan’s length will also affect your interest rate, with better rates offered on shorter-term loans. You can use our monthly payment calculator to determine what type of vehicle you can afford before shopping.
Advantages of Buying a Vehicle
What can be seen as disadvantages of leasing a vehicle can turn into advantages for buying one instead, such as:
- Asset: Whether you finance the vehicle or buy it outright, you have it as an asset.
- Unlimited mileage: When you own the vehicle, you determine how many miles you put on it.
- Customizations: You can make changes or upgrades to your vehicle to customize it to fit your needs or style.
Disadvantages of Buying a Vehicle
Depending on your driving habits and needs, buying a vehicle can also have several disadvantages, including:
- Higher monthly payments: When you finance a vehicle, you can expect higher monthly payments on your auto loan versus a lease.
- Higher down payment: The financial institution may require a higher down payment or trade on an auto loan over a lease.
- Limited selection: The top-of-the-line trim may be out of your price range when buying a vehicle.
- Older vehicles: You may not be able to afford the latest model year, meaning you may need to choose a used vehicle over a new one.
- No warranty: Your purchased vehicle may not have any of the manufacturer’s warranty remaining, leaving you solely responsible for all repairs and maintenance.
Is Leasing or Buying a Vehicle Right For You?
Drivers who don’t put a lot of miles on their vehicles and prefer having the latest and most excellent ones would benefit from leasing a car. Leasing lets you have the newest vehicles with all the bells and whistles for a lower monthly payment. However, if you know you drive a lot, want to add your unique touch to your vehicle, or enjoy a tangible asset at the end of all your monthly payments, then buying a car may be the better choice. Work out your needs to decide whether leasing or buying fits your lifestyle better.
When you’re ready to lease or buy your next vehicle, see the team at Stan McNabb Chevrolet of Columbia. You can find us at 101 S. James Campbell Blvd. in Columbia, Tennessee, from 9 a.m. to 7 p.m. Monday through Friday, closing at 6 p.m. on Saturday. Call us at 931-548-1370 or complete our secure online form to get started.