Vehicle Loans

LEASING VERSUS PURCHASE

An auto lease is nothing more than a legal extended rental agreement. The dealer sells the vehicle to the leasing company and the leasing company rents the vehicle to you. Leasing is not for everyone and is better suited for individuals who do not hold onto their vehicles for more than three to four years.

There are basically two types of leases, closed end and open end. In a closed end lease, at the end you simply walk away from the lease or you have the option to purchase the vehicle for the pre-determined amount. This is the most common type of lease in today's market. In an open end lease, the pre-determined value is estimated. At the end of the lease you will have to pay the difference between the estimated pre-determined value and the actual fair market value of the vehicle.

Facts about Leasing

You do not own the vehicle. You use the vehicle until the end of the lease. Upon lease completion, you may choose to either return the vehicle or buy out the remainder of the lease.

The monthly payments on a lease are normally lower than purchase or loan payments.

You are subject to mileage restrictions with penalties if you exceed the stated maximum allowable mileage in the lease contract. Some mileage charges can range from $.10 to $.20 per mile over the stated maximum.

At the end of the lease term, you will have to turn in the vehicle, purchase it or purchase another one.

Facts about Purchasing

You own the vehicle and you receive the title to the vehicle after the loan is paid in full. You may then sell or trade the vehicle at your discretion. You can also trade or sell the vehicle during the life of the loan as long as the loan is paid in full with the proceeds of the sale.

Payments are usually a little higher than a lease.

There are no mileage restrictions with a purchase.

After you have paid all of the loan payments, there are no additional costs or fees to be paid.