Originally Posted by RedHotAtl
So here is factual info for you to look over regarding the differences between a loan and a lease. My additions are in red:
ADVANTAGES OF LEASING
You pay less money up front. Compared to the down payment for a new car loan, the down payment for a leased vehicle is much lower, or even nonexistent.
Your monthly payments are lower, too. When you’re on a tight budget, a lease may be the way to go simply because the monthly payments are low, low, low.My buddy recently leased a vw jetta and after he had done that we ran the numbers to see what they would look like with the loan I have and he would have had a $20 per month lower payment and the balloon payment at the end was smaller should he decide to keep the car. Unlike payments for a car loan, lease payments only need to cover the car’s depreciation during the term of your lease (plus interest, taxes, and fees).
It’s easier to get approved for a lease than a new car loan. The goal posts are closer when you apply to lease a car than when you apply for a new car loan.
You won’t foot the bill for major repairs. Because most new-car warranties last the life of a typical lease, your only maintenance costs will consist of routine things like changing the oil, rotating the tires, and other recommended maintenance.
You’ll always drive a car with the latest tech and features. When you replace your car every two to three years via a new lease, you’ll always have access to the latest technologies.I trade in every 3 to 4 years with this loan and I dont have to worry about how many miles I put on my car, my buddy with the jetta lease for 12K per year is in his 10th month and has close to 11k on it at this point. I live 30 miles away from him and for some strange reason he hasn't been stopping by as often as he used to.
DISADVANTAGES OF LEASING
Your insurance rates are higher. I don't pay any different rate than normalWhen you lease, your insurance policy has to cover the amount that’s still owed on the lease in case the car is totaled.
You’re left with no trade-in. I trade my car in when I want ususally after the 3 year mark but before the 4 year mark I can trade in and have say around $1000 to the positive when I trade. You won't have a large difference between your trade in value and what you owe with this loan but whenever I have traded cars I had substantial value in I always got the worst trade in deals. There is a reason the dealer wants to know right away how much you owe on it. If they want to get the deal done and you owe market value for your trade in guess what? They have to step up and pay it off or not get the car you're buying sold. If you have lots of equity for some reason I dont think they will come back with a market value appraisal they will lowball you every time. When your lease is up, you’re left with nothing of value to take the edge off the cost of the next car. Whatever I owe on this loan is what I owe because its a loan and not a lease so if the car appraises at 23k and I owe 22k then I have 1000 against my next car lease gets you 0.
You’ll pay a host of fees at both the beginning and end of your lease. No fees or taxes outside of what you would pay with a purchaseWhile there are plenty of costs involved in taking out a new car loan, once it’s paid off, it’s over. At the end of a lease, however, you’ll still owe considerable fees.
You’ll pay extra if you exceed mileage restrictions. None on my loan When you turn in your car at the end of your lease, if you’ve driven more than the allowable number of miles (usually 12,000 to 15,000 miles per year), you could be liable for significant penalties.
Ending a lease early could cost as much as paying out the contract. Early termination fees on leases run notoriously high.I can pay off my loan at any time either by paying it off, selling the car, or trading it in
If you’re hard on your vehicle, you’ll pay penalties. A car lease will hold you financially liable if you exceed normal wear and tear on the leased vehicle. No penalties for car abuse other than you're getting screwed when you go to trade it in but you would have that with any loan
You need a good credit score in order to lease. While it’s generally easier to get a lease than it is a new car loan, you’ll still be required to have a strong credit score. Without one, you might have to buy a used car instead. This is the only thing with the loan I get you have to have a strong score to qualify for this loan
You won’t be able to customize your car. I can paint mine purple and put 28 inch rims on it if I choose, not that I would.... Because a lease requires that you return the vehicle in relatively comparable condition as when you leased it, you won’t be allowed to customize or modify the car. That means no custom stereo installations, paint jobs, or anything that can’t be reversed or removed before you return the car.
I hope that clears it up, this isnt a lease but what it is is a smart way to buy a car and have nice low payments. I hope that this helps someone who has the ability to comprehend a good thing when they see it and take the time to look into it and not jump to conclusions, not pointing fingers at anyone in particular......
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