Back to all

Lease verses Buy

September 27, 2020



Lease? Or buy? It's always a tough question for residents in the Redford area. But here are a few ideas that'll make the choice more clear.

Either option gives you a choice of how you might finance your car. If you buy, you'll pay the full cost of the car, with maybe an initial down payment, then monthly payments on the balance that pays down the loan principal, and the finance charge.

If you lease, you're financing the portion of the cost of the car that's used up during the term of the lease. When the lease is up, you return the car to your local Redford area dealership. You'll pay some money upfront; fees, security deposit, first month's payment and maybe a capital reduction. The month payments include a depreciation cost and a finance charge.

So how do you decide?

First, how big a down payment can you make? A lease would require a smaller down.

How much monthly payment can you afford? Again, lease payments will be much lower for any given down payment.

A lease needs you to have better credit, so that's a factor.

How long will you keep the car? If you tend to keep your cars around for a while, buying is cheaper. But just two or three years? Then leasing is the way to go.

All Night Auto Repair
33729 Plymouth Rd.
Livonia, Michigan 48150
734.427.3100

If your car might suffer a ding or two, like, say a work truck would, then buying's better. The leasing company will want their merchandise back at the lease end in tip top shape, and if repairs are needed, you'll pay.

How many miles do you drive in and around the Redford area? Important to consider because leases have a mileage limit, and if you go over, you pay a hefty charge per mile when the lease is up. So high mileage means a buy.

Will the car be used for business? Check with your accountant, but both financing options have different tax benefits, depending on your circumstances.

Over the short term, leasing is much cheaper. Medium term, leasing and buying costs are about the same. Over the long haul, leasing is always costs more.

Leases may sound a bit complicated, and the typical lease decision weighs more on the monthly payment, rather than price. So sometimes leasers may pay on a higher purchase price than a buyer would.

Here is a tip: If a salesman asks if you'll be leasing or buying, say you're not sure yet. Make your best deal, then look at financing options.

Here's another: With a buy or a lease, if you total the car, you'll owe the full amount of the loan, or the balance of the lease payments, and usually, it's less than the car's fair market value – and that's all your insurance company will pay. But ask your agent about gap insurance, which pays the difference between fair market value and what you owe. Big consideration for a lease.

Remember, you have to return your leased vehicle in excellent condition, and may need to do all manufacturer's recommended service and maintenance, or face penalties. So see your local Redford service center on a regular basis, get the required work done and save the service records. It's well worth it.

Need Service?

Request a Quote

More articles from Elite Tire & Auto Care

The New Blade in Town

February 18, 2024

If your windshield wipers are streaking and chattering when you turn them on in the rain or snow, it's time for a little "blade renewal." And when it comes to new wiper blades, there are some new designs that are worth a look. One of the latest is called the beam blade. It's different than conve... More

Heat and your Tires (Tire Pressure Monitoring System)

February 11, 2024

With hotter weather and brutal heat waves becoming more common, the pressure in your vehicle's tires goes up. After all, heat causes air to expand, and the air in your tires follows the laws of physics. Overinflated tires can reduce your vehicle's traction, cause a hard, punishing ride and make ... More

Muffler: Victim of Winter (Muffler Repair)

February 4, 2024

So you almost got through the winter until, one day, your muffler started sounding like a dragster, loud and obnoxious. It's not surprising. All that road salt and brine can cause rust to punch holes in a muffler, and that should raise a big, red warning flag about the safety of your vehicle. O... More