Leasing or Financing? What Are the Differences?

When it comes to buying or leasing a car the options can be confusing. To help you make an informed decision we have provided the information below. We hope you find it informative and useful.

Down Payments

Lease

Depending on your area, this usually includes the first month's payment, a refundable security deposit, down payment, taxes, registration fees, and possibly other fees. Check with Servco Chevrolet Leeward for more details regarding your specific offer.

Finance

Financing usually include the cash price or a down payment, taxes, registration fees, possibly some other fees, depending on current manufacturer's offers.

Monthly Payments

Lease

The vast majority of the time, lease payments will be lower than the loan payment when you finance because you only pay for the depreciation of the vehicle for the duration of the lease, plus interest, rent charges, taxes, and fees.

Finance

Loan payments are usually higher than leasing, because you're paying for the entire value of the car.

Ownership

Lease

You don't own the car; you pay to use it for a fixed period of time. At the end of the term, you either return it for a new vehicle or buy it from the dealership.

Finance

You own the vehicle and get to keep it, use it how you want, for as long as you want, and add any customizations or modifications that you want.

Depreciation

Lease

The future value of the car does not affect you when you lease, but you also do not get any equity from the car.

Finance

The vehicle will depreciate in value, but the equity is yours to use as you want.

At the end of your lease term, you can choose to return the vehicle and walk away after paying any end-of-lease charges, or work with Servco Chevrolet Leeward to lease a new vehicle.

Questions to Ask When Deciding to Buy, Finance or Lease a New Chevrolet

• How much do you drive? Do you drive a lot? Over 10,000 to 15,000 miles, depending on the lease agreement? You'll probably have to pay extra for each mile. If you plan on trading in your current vehicle, you may be penalized for above-average mileage too.
• How hard are you on the car? If you're prone to getting scratches on your car or have a high risk of damage to it from kids or other hazards, a lease may not be for you. Be aware of the wear-and-tear fees in your lease agreement.
• How long you plan on keeping the car? This is a big point of consideration. If you plan to only drive the car for a few years, then maybe leasing a new car is your best option. However, fees will incur if you try to get out of the lease before the term is up can be costly. You'll need to be sure you can stick with the terms of your lease.
• How much is the down payment? There may be little or no down payment required, and no up-front sales tax payment, depending on where you live. If so, leasing can be a low-cost way of driving a Chevrolet. You only pay for the portion of the vehicle you use, and your monthly payment is generally less than if you finance your car.
• Do you drive your car for business? When you lease, a portion of the car's depreciation and financing costs can be deducted on your taxes and where you live. On the other hand, interest on loans to buy a car isn't deductible (please consult your tax advisor). A lower payment means more disposable income for other investments.
• Do you know how many miles you'll need? You can tailor your lease to fit your driving habits and miles driven per year.
• Do you want to forego the hassle of selling the vehicle? Leasing means there is no hassle when it comes time to trade or sell your vehicle. The Chevrolet dealer will carry the risk of resale value at the end of the lease and provide you with a set purchase option. You can just hand the keys over to the dealer and get a new lease.

In the end, whether or not you want to lease or finance your car depends on your preferences and finances, as well as your long-term intentions. If you're the type of person that likes to have new cars with the latest features every few years, then leasing makes much more sense financially. However, if you intend to buy a car and drive it until it dies, or pass it onto a family member, then taking out a loan is your better option. In the end, it all depends on the level of financial commitment and ownership you would like to have with your vehicle. Whether you choose to lease or finance, Servco Chevrolet Leeward can take care of all your needs.