Buying vs. Leasing a Vehicle in Yakima, WA
Buying and leasing can both be practical ways to drive a new Chrysler, Dodge, Jeep or Ram vehicle. The better fit depends on how long you plan to keep your vehicle, how much you drive, your budget and how much flexibility you want.
What's the Difference Between Buying and Leasing?
When you buy a vehicle, you are purchasing it. If you finance the purchase, you repay the amount borrowed according to your loan agreement, and the lender generally has a lien or security interest in the vehicle until the loan is paid.
When you lease a vehicle, you are paying for the right to use it for a specific period of time and under specific conditions. The vehicle is owned by the lessor identified in your lease agreement, which is commonly a finance or leasing company. The dealership that arranges the lease is not necessarily the owner of the vehicle.
| Consideration | Buying | Leasing |
|---|---|---|
| Ownership | You are purchasing the vehicle. If you finance it, the lender generally retains a lien or security interest until the loan is satisfied. | You are paying for the right to use the vehicle. The lessor named in the lease agreement owns the vehicle during the lease. |
| Amount Due at Signing | Depending on the transaction, this may include a down payment, taxes, registration, title costs and other applicable fees. A down payment is not required in every purchase. | The amount due at signing varies by lease. It may include the first payment, taxes, registration, fees, an acquisition fee and any capitalized-cost reduction. A security deposit may apply to some leases but is not required by every program. |
| Monthly Payments | Loan payments repay the amount financed plus applicable finance charges. Auto loan terms vary, and terms of roughly three to seven years are common. | Lease payments are based largely on the vehicle's expected depreciation during the lease term, along with rent charges, taxes and applicable fees. Payments may be lower than financing the same vehicle, but that is not guaranteed. |
| Mileage | A traditional vehicle loan does not normally impose a contractual mileage limit. Higher mileage can, however, reduce the vehicle's resale or trade-in value. | Most leases include a mileage allowance. Many consumer leases allow approximately 10,000 to 15,000 miles per year, but your actual allowance and any excess-mileage charge are determined by your lease agreement. |
| Vehicle Modifications | Owners generally have more freedom to modify their vehicles, subject to their financing agreement, warranty considerations, insurance requirements and applicable laws. | Because the vehicle must normally be returned in acceptable condition, permanent modifications can create problems or additional costs. Review the lease agreement before making modifications. |
| Wear and Condition | Wear, damage and vehicle condition affect resale or trade-in value, but there is generally no lease-style end-of-term inspection. | The lease may impose charges for excessive wear, damage, missing equipment or excess mileage when the vehicle is returned. |
| Changing Vehicles Early | You may sell or trade the vehicle, but any outstanding loan balance must be addressed as part of the transaction. | Ending a lease early can result in substantial early-termination charges. You cannot assume that you can simply return the vehicle and stop making payments. |
| End of the Term | After the loan is fully paid and the lender's lien is released, there are no further loan payments and you may keep, sell or trade the vehicle. | You generally return the vehicle at the end of the lease. If your lease includes a purchase option, you may also be able to buy it according to the purchase terms stated in the lease agreement. |
Why Consider Buying?
Buying may make sense if you want to keep your vehicle for a long time, drive without a lease mileage allowance or want greater freedom to sell, trade or customize your vehicle.
Your monthly payment may be higher than a comparable lease payment, but each payment reduces your loan balance. Once the loan is paid, you can continue driving the vehicle without a monthly vehicle loan payment.
Why Consider Leasing?
Leasing may appeal to drivers who prefer replacing their vehicle every few years and who expect their driving habits to fit comfortably within the lease's mileage and condition requirements.
Lease payments may also be lower than financing the same vehicle because the payment is based largely on the vehicle's expected depreciation during the lease rather than repayment of the vehicle's entire purchase price.
Pay Attention to the Lease Agreement
Lease programs are not all the same. Before signing, review the mileage allowance, excess-mileage charge, wear-and-use standards, amount due at signing, monthly payment, lease term, early-termination provisions and whether the agreement includes a purchase option. The signed lease agreement determines the actual terms of your lease.
Buying vs. Leasing FAQs
Who owns a vehicle when I lease it?
The lessor identified in your lease agreement owns the vehicle. The lessor is often a finance or leasing company. The dealership may arrange the transaction, but it is not necessarily the owner of the leased vehicle.
Are lease payments always lower than finance payments?
No. Lease payments are often lower than payments for financing the same vehicle because a lease payment is based largely on expected depreciation during the lease term. Actual payments depend on the vehicle, price, lease or loan terms, taxes, fees, incentives and credit qualifications.
Do I have to make a down payment to buy or lease a vehicle?
Not necessarily. The amount due at signing depends on the transaction and financing or lease program. A purchase may or may not require a down payment. A lease may include a capitalized-cost reduction and other amounts due at signing, but requirements vary by program.
How many miles can I drive on a lease?
Your mileage allowance is specified in your lease agreement. Many consumer auto leases provide approximately 10,000 to 15,000 miles per year. Exceeding the contracted mileage allowance may result in an excess-mileage charge when the vehicle is returned.
Can I buy my leased vehicle at the end of the lease?
It depends on the lease. If your agreement includes a purchase option, the lease will explain the purchase price or how that price is determined, along with any applicable purchase-option terms or fees. Not every lease is required to include a purchase option.
Can I end a vehicle lease early?
A lease may be terminated early according to the terms of the agreement, but early termination can involve substantial charges. Review your lease before making plans to return or replace a leased vehicle before the scheduled end of the term.
Should I buy or lease my next vehicle?
There is no single answer for every driver. Consider how many miles you drive, how long you normally keep a vehicle, how important ownership is to you, whether you plan to modify the vehicle and the total costs and terms of each option. The finance team at Yakima Chrysler Dodge Jeep Ram can help you compare available purchase and lease options for a specific vehicle.
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Important: This page provides general educational information about vehicle financing and leasing and is not a lease, credit offer or contract. Actual vehicle availability, financing and lease programs, credit approval, rates, payments, amounts due at signing, mileage allowances, fees, purchase options and other terms vary by vehicle, customer, lender or lessor and program. Review the applicable loan or lease agreement and disclosures for complete terms before entering into a transaction.