Leasing VS Buying
In the automotive industry there are multiple ways you can go about getting a vehicle; Leasing or Buying. There are pros and cons to both, which we will go over, but the question is: what really is the difference? I sat down with a few Sales Consultants to get some answers.
What does it mean to LEASE a vehicle?
When you lease a vehicle, you aren’t necessarily owning it. However, if you finance a vehicle, you could say the same thing. With leasing you are only renting for 3 years, so you are taking a portion of the payment. Leasing, you return the vehicle, and you get so many miles that you can put on per year. For example, at Okoboji Motor Company, our leasing program normally consists of leasing a vehicle for 3 years with 10,000 miles per year. This means you must try your best to not go over 10k miles per year. Otherwise when you return your lease, if you’re over on miles then you will have to pay a penalty. The penalties are not huge by any means, depending on the car manufacturer; it could range from 20-25 cents per extra mile. With leasing, most people prefer not to put a big chunk of money down. Instead, they take the highest amount of payment available with the lowest amount of money down. This is because say you want to lease a car and you put $2,000 down to lower your payment. Well, then its 3 months in, and you get in a car accident. You have spent $2,000 plus the three months of worth of car payments all for a vehicle that is totaled, you are out that money. Versus someone who does not put anything down; they would just be out the three months worth of car payments.
What does it mean to FINANCE/BUY a vehicle?
With financing, you have your payments, and it will be yours but technically the bank has ownership while you are making the payments. However, if you have the cash and buy it out up front, then the vehicle is yours once you sign the paperwork. When somebody looks at leasing the vehicle, they only look at the payment amount. If you finance, you are committing to the vehicle fully for the next 6/7 years or whatever term you choose. Our General Manager, Steve Williams stated “we always joke here about dating/marrying. If you’re marrying the car day one, its finance. If you’re leasing then you’re dating the car for 2/3 years, figure out if you like it and then you move on to marrying the car after a 2/3 year relationship.”
Pros and Cons:
Leasing Pros: new vehicle every 3 years, if you always want the newest. Economic protection, when gas came up really high, if you were in a truck, trucks market value plummeted. If there is a recall, that majorly impacts vehicles, and it protects you from that.
Buying Pros: If you hold on to your vehicle for 8-10 years or put on a ton of miles. Its yours. You instantly have equity in that vehicle. People like to own things. You don’t have to rotate payments. With financing if you put $1,500 down on a $40,000 loan, you’re starting yourself way ahead
Leasing Cons: Miles, have to know how many miles you do a year. You can get yourself into trouble if you don’t pay attention.
Buying Cons: If you are financing, you never really own that vehicle until the loan is paid off. If you flat out buy it, there are no cons.
The question isn’t which way is better, rather which option will work best for YOU. If you have a short commute and don’t put a lot of miles on your car, then maybe leasing would be beneficial. Especially if you’re someone who always wants the newest model vehicle. Leasing is catered to those who want the new. However, if you’re someone who loves to travel and keep your vehicle for 5-10 years, then buying/financing would be your best route. There are multiple options, and you don’t have to figure it out on your own; our Sales Consultants are trained to help you find the right fit for your lifestyle.
2720 17th Street Spirit Lake, IA 51360