Car Buying, Leasing, or Lease To Own: Which is Best For You?
With car buying season in full swing, you may be thinking of replacing your used car, so have you considered all the options? If you’re feeling intimidated by the increasing cost of buying a new car, leasing might make more sense for your situation. Let’s dive into the pros and cons of all three—yes, three—options that Educators can offer you!
Buying
Financing a car is the traditional path that most take. It feels great to take those keys from the dealership and know that you own that new car! But financing to own has become expensive, causing some people to wonder if it’s best for their current situation.
Pros:
- You’ll own it!
- Eventually, payments will end.
- No limits on mileage.
- Buy, sell or trade whenever.
Cons:
- You’re responsible for all repairs and maintenance.
- Monthly payments are higher than leases.
- Depreciation starts as soon as you leave the lot.
- Longer financial commitment than a lease.
Leasing
As car ownership costs hit record highs, nearly 25% of buyers are turning to leases. Leasing reduces upfront and ongoing expenses because payments cover only the vehicle’s depreciation during the term, rather than the full purchase price and total sales tax.
Pros:
- Lower payments than buying
- Lower or no down payment needed
- Drive a new car every few years
- Less hassle when swapping
Cons:
- You don’t own the vehicle.
- Potential wear and tear charges at the end of lease.
- Mileage caps that come with penalties.
- Payments never end, so you are always making a payment on a vehicle.
Lease-to-Own
Leasing-to-own is an underrated option for people who find themselves needing to tighten up their budget. Monthly payments are lower than outright purchasing and financing a car, but the possibility of owning the vehicle in a few years’ time is open! This is an especially great option for people who anticipate having a higher income soon.
Pros:
- Path to ownership without the full purchase price upfront
- Maintain a more affordable monthly payment from new off the lot to final payment.
- Low to no down payment
- Flexibility to buy out your lease once the balance is low enough to maintain the monthly payments.
- Ability to “try” the car before committing to a purchase.
Cons:
- Long-term, you may end up paying more in interest.
- The financial owns the title until you buy out the lease.
- Should you decide not to buy out the lease at the end, excess mileage and damage penalties could apply.
- At the end of the lease term, you typically must purchase at a predetermined price or return the vehicle.
Want to discuss your options with one of our Vehicle Advisors? Get in touch with our Educators Vehicle Solutions® department via phone at 262.884.6675 or email at vehiclesolutions@ecu.com.
Insured by NCUA. Membership eligibility required. Educators does not sell cars.