Car Lease Vs. Finance Vs. Cash: Pros & Cons Explained

Acquiring your next vehicle can be an intimidating prospect: Is it better to lease vs. buy car models? If purchasing, what's the difference between financing and paying with cash? We at Bomnin Chevrolet Dadeland want to give you a headstart on an excellent ownership or leasing experience. So, through our guide, you'll learn the lease vs. finance differences, along with when you should simply purchase your vehicle outright.

Understanding the Basics

What Is Car Leasing?

Car leasing is a form of contract renting where you pay a monthly cost to drive a vehicle for a set amount of time – typically between two to four years. After that, you may either purchase the car for an agreed-upon price, return it for a new model, or walk away. You can talk with our representatives for information about lease flexibility for mileage limits, term durations, and more.

What Is Car Financing?

Financing a vehicle involves taking out a loan, paying an initial downpayment, and then paying a monthly rate on your choice of model until it is paid off. Typically, these loans have fixed annual percentage rates announced upon acceptance. However, unlike a lease, you finance a car to own it – once your payments are made, you get the title and can sell it at your leisure.

What Is Buying a Car With Cash?

Buying a model with cash refers to paying the full, up-front cost for the car, truck, or SUV at the finance center. While this incurs the most immediate cost for you, it means you won't have to pay any monthly fees or interest charges. You get the title in your hand right away, letting you benefit from full ownership within minutes.

Pros & Cons Comparison

	Financing	Leasing	Buying For Cash
Pros	You get to own the car Lower up-front cost Refinancing opportunities to lower overall cost Makes newer models more affordable Build credit score	Lower monthly costs Lower, if any, downpayment Flexible mileage and term limits Drive the car while it's under basic warranties Lower overall maintenance costs Build credit score	Immediate ownership of the vehicle No monthly rates, lower overall cost No chance of overspending Can benefit from low depreciation by immediate sale Lower financial strain because of no debt
Cons	Ownership takes a while Chances for repossession Loans dependent on credit score	Lease payments to go toward ownership Limited extension opportunities Loans dependent on credit score	You likely will not build your credit score High up-front costs Few specials and limited-time offers

Detailed Cost Analysis: Finance vs. Buy Car (Cash) vs. Lease

As you're looking through financial opportunities, knowing how to look into fees and debt is crucial. Here's a basic run-through.

Financing: Medium up-front cost, medium monthly rates based on MSRP. May pay origination, documentation, registration, maintenance, and early repayment/termination fees. Financing will also incur sales, registration, and use taxes, typically rolled into the price at the finance center.
Leasing: Lower up-front and monthly rates than financing. Fees include acquisition, deposition, and state registration fees. You'll also be responsible for wear and tear expenses, mileage charges, and early contract termination fees. Sales and use tax apply.
Buying Outright: Huge up-front cost, no monthly payment. You may incur unique dealership fees for buying with cash, alongside documentation, registration, and maintenance fees. Sales tax applies, as usual.

Lifestyle Considerations

The method by which you purchase your next vehicle from our new Chevrolet inventory may depend on your lifestyle. For example, if you know you drive more than 15,000 miles per year, your vehicle might depreciate faster, and you may incur additional fees from leasing. However, if you don't drive a lot, financing can keep your resale value high while keeping money in your pocket.

Upgrading is much easier with leasing than the other two. Rather than owning a new car and needing to trade in or flat-out purchase a new one, a lease ensures you have the flexibility to drive a new model every few years.

If you want to build credit, you won't want to buy your Chevy car, truck, or SUV outright. That's because your credit score only builds when you make loan payments on time – not when you flat-out buy a vehicle.

Special Situations & Tax Implications

Your use case can impact whether you should lease vs. buy car models. For example, businesses can deduct car leasing payments from their taxes, but they'll never own the vehicle. If a company decides to finance their work vehicles, they may be able to deduct loan interest rates and depreciation. If you don't plan on driving a company vehicle often, leasing may be the way to go. However, if you plan to drive the vehicle often, it's likely more affordable to purchase it. Talk to your tax expert for more information.

In addition, talk with your dealership about how sales tax applies to your purchase. For example, you may be eligible for tax exemptions in conjunction with our Chevy lease and finance deals, making it easier to get behind the wheel of a new Chevy vehicle.

Who Should Consider Each Option?

Financing: You want to own your model, but you also intend to build your credit score and keep an emergency fund stored away. This method lets you own a newer vehicle in a broad price range.
Leasing: You're interested in trying something new but aren't ready to fully commit to owning its title. This method makes monthly payments straightforward, and in a set number of years, you get the flexibility to purchase your vehicle, trade it for a new one, or simply return it and walk away.
Buy With Cash: You have the money to get a model within your price range and don't want to deal with monthly expenses or debt. You may want to sell your model within a few months or years without dealing with early payment fees.

Final Decision-Making Tips

Talk about sales tax with your trusted tax experts.
Evaluate how quickly you want to own a new vehicle.
Check your budget.
Explore specials and limited-time offers.