One of the most common questions we hear at our dealership is: What are the differences between leasing a vehicle vs. buying? Buying a car is an important decision, and picking the best way to buy the car for you can feel stressful.
One of our Patriot Nissan lease specials probably caught your eye and has you wondering about leasing a vehicle vs. buying. When you buy a car, there are three ways to do it: you can pay cash for the vehicle in full at the time of purchase, you can finance the car, or you can lease.
Let's take a look at the difference between leasing and buying a car, so you can decide if it's better for you to lease or buy a car.
What Does It Mean to Finance a Car?
When you finance a car, you’re borrowing the amount of money you need to buy the car and pay back a little bit every month plus interest.
A key difference between buying and leasing is, when you buy (finance) a car, you own the car at the end of your finance term when your loan is paid off. At this point, the car is yours until you decide to sell it or trade it in down the road.
If you're looking for used car financing offers and subprime auto loans because your credit score is less than perfect at the moment, be sure to learn more about bad credit loans.
What Does It Mean to Lease a Car?
In general, cars depreciate over time. The price of a car today will be less than the price of that same car three years from now. That means, if you pay cash for a car today, three years from now, it will typically be worth less than it is now. It will have depreciated.
When you lease a car, you're essentially covering the cost of this depreciation plus taxes. A car dealership has to wait until your lease term ends and sell it for less than they could today, so a lease covers this difference.
The difference between leasing and buying is you don't own the vehicle at the end of the lease term.
So, Should You Lease or Buy?
Now that we understand our terms, let's look at leasing a vehicle vs. buying and highlight the benefits of each so you can take home that new Nissan Pathfinder you have your eye on.
If you plan to own your car for more than five years and you drive more than 10,000 miles per year, then financing is a great option.
If you like to always have a new car with the latest features and drive fewer than 10,000 miles, one of our Patriot Nissan lease specials is an excellent option. Another benefit of when you lease versus buy is a company car lease can be a smart tax deduction.
||No permanent ownership without lease or finance to buy
||Can modify car as you wish
||Cannot modify without breaking contract
||No mileage limits
||Mileage put on car is limited
||Sell the car any time
||Can return lease and drive a new car every few years
||Post-warranty repair costs
||Repairs typically covered under warranty
||No additional charges
Leasing a Vehicle vs. Buying: Frequently Asked Questions
Why is leasing a car smart?
A new car lease has many benefits. When you lease a car, you get a new car with the latest features, audio integration systems, and driver-assist safety features. Also, you can afford more car because lease payments cover depreciation, which makes it easier to get into a luxury vehicle. A new company car lease can offer significant tax savings.
What are the pros and cons of leasing a car vs. buying?
A car lease allows many people to drive a car that's more expensive than they could otherwise afford and enjoy the peace of mind that comes with a warranty for the duration of the lease. The downside of a lease is, there are mileage restrictions on the vehicle, and you need to return the car in terrific condition to prevent additional fees.
When should you lease vs. buy a car?
If you are debating between leasing a vehicle vs. buying, we're here to help. If your automotive needs might change over the next few years, a lease is a great option for someone who wants a sedan now, but a family SUV is on the horizon. If you want to own what you drive for the foreseeable future, then you should buy.
Lease vs. Buy Car Calculator
Patriot Nissan - Frequently Asked Questions(FAQ)
You're more likely to buy
- When you lease a car, you are typically capped at 15,000 miles a year. Additional mileage can cost you up to 35 cents per mile. And that can really add up.
- If you like to personalize a car, this investment can be lost on a leased car.
- If you like the idea of ownership, you are less likely to be happy with the lease option.
- If you like the feeling of accomplishment that paying off a large purchase brings and should consider that when you lease a car, the payment ends only when you return the car.
- If the car you presently own is over 3 years old you are more likely a buyer. While not always true, you can usually drive for less if you're willing to buy and drive for at least 3 years.
- If you don't mind doing your own car repairs, you probably don't mind driving a car after the warranty expires.
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You're more likely to lease
- Lease arrangements usually involve a 15,000 miles-per-year cap and charge for extra miles. If you drive very little, you may be a candidate for a luxury lease.
- When you negotiate a 24 or 36-month lease, you can be sure you'll always be driving a new vehicle.
- Although you need to maintain and repair your leased vehicle just as you would an owned vehicle, because you typically lease for 2 to 3 years, the car is normally under warranty.
- Many people prefer to drive a vehicle that is priced above their means and leasing provides the solution.
- If you don't mind not owning the car, you are free to enjoy the benefits of leasing like low monthly payments and a low down payment.
- If you own the company, and you use your car for business, check with your tax advisor. You may be able to deduct your auto expenses, including your monthly lease payment. And if the company you work for gives you a monthly car allowance, you may want to lease since you'll be able to drive a nicer car for a lower monthly payment.
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