Buying and Leasing differences....

When you buy, you pay for the entire cost of a vehicle, regardless of how many miles you drive it. You typically make a down payment, pay sales taxes in the loan (or up front if paying cash), and pay an interest rate determined by your loan company, based on your credit history. You make your first payment a month after you sign your contract. Later, you may decide to sell or possibly trade the vehicle for its depreciated resale value. Typically, at the end of the loan period you may well own the car, but chances are you really wanted to trade it in a year ago or earlier. Since this is a depreciating asset, it loses value over time with some makes and models depreciating faster than others. So, the car you now own and don't really want isn't worth very much when you try to trade it in. However, pride of ownership is important to many consumers; others just want to drive a vehicle till it falls apart!

When you lease, you pay only a portion of a vehicle's cost, which is the part that you "use up" during the time you're driving it. You have the option of not making a down payment, you pay sales tax only on your monthly payments, and you pay a financial rate, called money factor, that is similar to the interest on a loan. Typically, the vehicle is covered under the manufacturers warranty the entire time of your lease, meaning you won't have to worry about large out of pocket expenses to fix your vehicle.  It generally carries a much cheaper payments as well and you make your first payment when you come to pick up your new Subaru vehicle.

Buy vs lease example...

As an example, if you lease a car that costs $30,000, that will have an estimated value of $18,000 after 36 months, you pay for the $12,000 difference (depreciation), plus finance charges, plus fees.

When you buy, you pay the entire $30,000, plus finance charges, plus fees.

This is essentially why leasing offers significantly lower monthly payments than buying.

The benefit of buying is that once the vehicle is paid off you own it outright and can continue to drive it until you decide to either purchase or lease your next vehicle.  You may run into a situation where your vehicle begins to need costly repairs so that is the trade off you have to consider at that time.

With a lease, once your lease is up, you can either buy the vehicle outright or turn around and begin a new lease with a new vehicle.  This is a great option for individuals who like driving a new car every few years and who want to avoid the possibility of costly repairs after the warranty period has expired.

You should LEASE if:

  • If you enjoy driving a new car every three or four years
  • Want lower monthly payments
  • Like having a car that has the latest safety & technology features
  • Knowing your vehicle is always under warranty
  • Don't enjoy trading and selling used cars
  • Don't care about building ownership equity
  • Have a stable predictable lifestyle
  • Drive an average number of miles
  • Properly maintain your cars

You should BUY if:
  • If you don't mind higher monthly payments,
  • Prefer to build up some trade-in or resale value (equity)
  • Like the idea of having ownership of your car,
  • Prefer paying off your loan and being Debt-Free for a while
  • You don't mind paying cost of repairs after warranty has expired
  • Drive more than average miles
  • Prefer to drive your cars for years to spread out the cost
  • Like to customize your cars
  • Expect lifestyle changes in the near future

If you are a two car family where at least one car does not exceed 15,000 miles per year, a clear option would be to lease at least one of your vehicles. Purchasing a car can be more risky than leasing. We all know how much cars depreciate. The best option is the one where you put down the least amount of money. The less out of your pocket, the less you have to lose. Please ask your Hodges Subaru Sales Professional or Business Manager to show you BOTH lease and finance payments so you can make an informed decision.