Lease Vs. Finance

Unsure whether to lease or finance your next vehicle?

Explore the differences below

What is it?

Lease:

You can use the vehicle for a fixed number of months and miles, but you don't own the vehicle. Similar to a rental car!

Finance:

You take out a loan, and once it's paid back in full, you own the vehicle!

Balloon:

Similar to financing, you take out a loan, and once it's paid back in full, you own the car! The difference here is there's a large lump sum "balloon" payment due at the end of the loan term. (Not available in all states).

How do I pay for this?

Lease:

Monthly payments are usually lower than financing and pay for the portion of the vehicle used during the lease term, including expected depreciation, rent charge, taxes and fees.

Finance:

Monthly payments are usually higher compared to leasing because you're paying the entire purchase price, plus interest and finance charges, taxes and fees; however, each payment builds towards quity towards ownership.

Balloon:

Monthly payments are usually lower than standard financing, BUT the final balloon payment must be paid in full by cash or financing arrangement.

What does it cost?

Lease:

Upfront costs due at lease signing may include first month's payment, down payment, taxes, registration, lease acquisition fee, and other fees and charges.

Finance:

Upfront costs due at contract signing may include down payment, taxes, registration, and other fees and charges.

Balloon:

Upfront costs due at contract signing may include down payment, taxes, registration, and other fees and charges.

What about milage?

Lease:

If you drive over the allotted milage in your lease, you may be charged an extra fee per mile.

Finance:

No milage penalties.

Balloon:

No milage penalties.

Can I cancel early?

Lease:

You may have to pay an early termination fee to cancel your lease early.

Finance:

You can pay in full at any point during the contract term without penalty.

Balloon:

You can pay in full at any point during the contract term without penalty, this includes the lump sum "balloon" payment.

Who owns the vehicle?

Lease:

At end of lease, you can either buy the vehicle outright, or turn it in and enter into another lease for a new vehicle.

Finance:

Once you've made all the payments of your loan, you own the vehicle!

Balloon:

Once you've made all the payments of your loan, including payment of the final lump sum, you own the vehicle!