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.
