Buying
Is it better to buy or lease a car?
Buying is usually better if you plan to keep the vehicle long-term, want to build equity, or drive more than the typical lease mileage limits. You’ll pay more upfront, but the total cost of ownership becomes lower over several years.
What is the total cost of buying a car?
The total cost of buying includes the sale price, taxes, fees, interest (if financing), insurance, fuel, and maintenance. You’ll also consider depreciation, which is the reduction in value over time. Once the loan is paid off, the vehicle becomes an asset you can keep, trade, or sell.
How does financing a car work?
Financing lets you borrow money to buy a vehicle and repay it in monthly installments with interest. Your APR is based on your credit score, loan term, and the lender. A larger down payment or shorter loan term usually lowers the total cost of the loan.
What are the benefits of buying a car?
Buying gives you full ownership, no mileage limits, long-term cost savings, and the ability to customize the vehicle. When the loan ends, you can drive payment-free and use the vehicle as equity for trade-in value.
How much should I put down when buying a car?
Most experts recommend 10% down on a new car and 20% on a used car. A larger down payment reduces your monthly payment, lowers interest charges, and helps prevent being “upside down” on your loan.
Leasing
How does leasing a car work?
Leasing lets you drive a new vehicle for a set term—usually 24 to 36 months—while making monthly payments based on the vehicle’s depreciation. At the end of the lease, you can return it, buy it, or lease a new model. Leases often come with mileage limits and wear-and-tear guidelines.
Is leasing cheaper than buying?
Leasing typically offers lower monthly payments and lower upfront costs compared to buying. However, you don’t build equity, and you may pay extra if you exceed mileage limits or return the vehicle with excess wear. Long-term, leasing can be more expensive if you continue leasing back-to-back.
What are the mileage limits on a lease?
Most leases include 10,000 to 15,000 miles per year. If you exceed this limit, you’ll pay an additional fee per mile. Drivers with long commutes or frequent road trips may find buying a better long-term option.
What fees should I expect when leasing a car?
Lease fees may include the acquisition fee, documentation fee, registration, taxes, and a disposition fee at the end of the lease. You may also pay charges for excess mileage or wear-and-tear. Putting money down is optional, but can help lower your monthly payment.
Can I buy my car at the end of the lease?
Yes. Most leases include a buyout option at a predetermined price. Buying your leased vehicle can be a smart choice if its market value is higher than the buyout amount or if you prefer to keep a vehicle you already know and like.