Buying vs. Leasing Advice from Three Rivers Volkswagen

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 a Vehicle

When it comes to purchasing a car, you have the option to buy it outright with cash or finance it through monthly payments. Either way, once the transaction is complete, the car becomes yours.

Financing Details

Financing a vehicle involves meeting specific obligations set by the lender, such as a required down payment and timely monthly installments. Failure to comply could lead to repossession of the vehicle.

For most buyers, financing is a practical choice since it allows them to spread out the cost of the vehicle plus interest over a mutually agreed period, typically three to six years. Lenders consider factors like income, credit score, and the vehicle's cost to determine loan terms and interest rates.

Upfront Costs

When financing a car, a down payment is typically required by the lender to secure the purchase. This payment, usually 10% to 20% of the vehicle's MSRP, not only secures ownership but also lowers the monthly payment amount.

Buyers can also trade in another vehicle and apply any equity towards the down payment, with the amount typically influenced by credit score and lender requirements.

Future Value and Equity

Despite initial depreciation—where a new car can lose nearly 20% of its value in the first year—buying a car allows you to build equity. Managing payments effectively can outpace depreciation, enabling you to leverage this equity towards your next vehicle purchase.

Vehicle maintenance plays a crucial role in preserving value. Regular servicing at a factory-authorized facility not only protects your investment but also enhances resale value in the future.

Ownership Completion

Once you fulfill all obligations outlined in your financing agreement, the vehicle becomes entirely yours. The lending institution will issue a lien release as proof of full ownership, marking the end of your payments.


Understanding Car Leasing

When you lease a car, you're not purchasing it outright; instead, you pay for its use while the finance institution retains ownership. This often results in lower monthly payments compared to buying.

Protection and Flexibility

Leasing shields you from unexpected depreciation, such as from recalls, which won't affect your financial obligations as it would with ownership. Upfront costs typically include the first month's payment, a security deposit, acquisition fees, and taxes.

Future Considerations

At lease end, you return the vehicle, avoiding concerns about its resale value. Mileage limits and wear-and-tear guidelines apply, potentially incurring extra charges upon return. Leases typically span two to three years, appealing to those who prefer driving newer models.

End-of-Lease Options

Most lessees return the vehicle, though some opt to purchase it mid-lease or at lease end, or trade it in early. Discuss these choices with us before finalizing your lease terms.

Choosing the Right Option

Deciding between leasing and buying depends on your preferences and financial situation. For personalized guidance, consult with a nearby dealership. At Three Rivers Volkswagen, we offer various leasing and financing options for new Fords and used vehicles in our inventory. Contact us online to lease or purchase your next vehicle today.