The Decision to Lease, Finance or Pay Cash For Your Vehicle
Traditionally, financing vehicles has been the most popular choice for consumers. It has allowed consumers to own their
car outright, pick a monthly payment within their budget, and eliminates the issue of draining their savings account for the initial purchase. In more recent years, leasing has grown in popularity. In fact, according to Cars.com, 20% of new car buyers leased their vehicles in 2013. This shift is not unexpected with the growing enjoyment of driving a new car every few years and the competitive lease payments available. Paying cash has always been a valuable option as well as it eliminates interest rates and financing fees. Each purchasing option has its advantages and disadvantages. When choosing the right way to pay for a new vehicle, the ultimate considerations are the type of vehicle interested in, how long consumers care to drive it, budget, and credit history.
Ewald Automotive Group understands that our job is not only to find the perfect vehicle for you, but to provide you with all of the information on purchasing options. Our Finance and sales teams are fully trained and eager to help you with all of your questions so that you receive the right pricing and right way to purchase your new vehicle. We would like to provide you with a general reference of your options, but please contact us with any questions.
PAYING CASH | LEASING | FINANCING |
Monthly Payment | Monthly Payment | Monthly Payment |
When you purchase a vehicle outright with cash, a major advantage is that it eliminates future monthly payments. | Monthly lease payments are typically lower than finance payments. This is because your payment is solely covering the depreciation of your vehicle and not the full purchase price plus interest charges that is finance payments. Alternatively, insurance premiums tend to be higher with leased vehicles causing a higher monthly expense. | Monthly finance payments are typically higher than lease payments. Your monthly payments are covering the entire purchase of the vehicle, interest, finance charges, and taxes. Alternatively, insurance costs are commonly lower for financed vehicles than leased vehicles. However, with the extended use of your vehicle, you can expect to acquire repair bills. |
PAYING CASH | LEASING | FINANCING |
Vehicle Return & Future Value | Vehicle Return & Future Value | Vehicle Return & Future Value |
When you decide you want a different vehicle, you must sell or trade the vehicle for another. This involves the risk of depreciated resale value. | After your lease ends, you pay any charged end-of-lease costs and walk away. You will not have the risk of a loss in future market value of the vehicle. | When you decide you want a different vehicle, you must sell or trade the vehicle for another. This involves the risk of depreciated resale value. |
PAYING CASH | LEASING | FINANCING |
Up Front Costs | Up Front Costs | Up Front Costs |
Up-front costs for purchasing a vehicle outright with cash are the greater than leasing and financing a vehicle. Up-front costs may include:
| Up-front costs of leasing a vehicle are usually less than up-front financing costs. Up-front costs may include:
| Up-front costs of buying a vehicle are typically greater than up-front leasing costs. Up-front costs may include:
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PAYING CASH | LEASING | FINANCING |
Total Costs | Total Costs | Total Costs |
The total cost for buying a vehicle outright includes the upfront costs plus maintenance, repairs, depreciation costs, and the time value of money. | The total costs of leasing a vehicle are typically less than financing because of lease savings on depreciation and gap coverage, reduced sales tax, maintenance and repair savings, and the time value of money benefits. | The total costs of financing a vehicle are typically more than for leasing because of higher costs of depreciation and gap liability, maintenance and repairs, more sales tax, and the time value of money differences. |
