Buying a Ford vs. Leasing a Ford

Comparing leasing to buying a car can be a little confusing, as there are often many options on the cards. Both the upfront cost and full value of the car are usually pivotal in deciding whether to lease or buy. If those factors match up, then the decision can be one of preference.  

When you purchase a car, you are responsible for the total price. You'll own it outright after paying any financing institution. Leasing is more like renting an apartment: you'll pay for use while you drive it, usually ending at a time limit previously agreed to with the financing institution.  Let's look at each of these options in turn.

Buying a Car

  • Ownership
When you purchase a car with financing, you'll normally pay a lump sum or down payment. Your finance company will then require monthly payments until the end of the agreement, at which point, you own the car outright. Your finance company is a lender so you still own the car, but you'll need to pay your debt back to them. 

  • Initial payments
When you finance, your initial payment will include the down payment if you are using a financial institution, registration and other DMV fees, and taxes. Loan payments are usually higher than lease payments. With a loan, you are paying interest and monthly payments based on the total value of the car at the time of purchase.

  • Return or Resale Value
If you decide you prefer another vehicle, you'll have to sell or trade in the purchased one. Once it's paid off, though, the car's cash value for resale is yours. The better you care for your car, the more it will be worth once the payments to the lender are made and it is officially yours. 

  • Conclusion of the Finance Terms
Once your vehicle is paid off to the lender, it's yours. Mileage is not something that is necessarily worrisome, outside of the effect it has on the car's value. You can customize it to your liking, and wear and tear upkeep is essentially optional. However, if you don't care for the car, its resale cash value will diminish.  

Leasing a Vehicle

  • Ownership
When you lease a vehicle, you haven't purchased it. You are paying for the use of the car similar to any rental agreement. This puts you in obligation to also follow standard practices of the lessor who will require mileage and upkeep checks.  
  • Initial Payments
Normally the first month lease payment plus a security deposit is required by the leasing company. You won't need a significant sum as a down payment, though. You'll also pay taxes and registration fees. 

  • Return or Resale Value
Ending your lease early can incur high charges, so use caution if you are unsure about the length of the lease agreement. At the end of the lease, though, you can return the car and not be bothered with resale or disposal. You won't have equity in the car at the end of the lease since it's not yours to re-sell, but this also means if its value changes, you are not affected.

  • Conclusion of the Lease Terms
You often have the option to purchase the vehicle at the lease end. Most people return the vehicle and some companies allow you to trade it in for another, while the lease is still open. You can discuss these options and have them added if needed when you begin the lease agreement.  

Should I Lease a Vehicle or Buy a Vehicle?

If you are okay with the mileage restrictions, maintenance requirements and being able to select a new car every few years, then leasing is a good option.

If like many people, you grow attached to your vehicle or hope to use it then trade it in for its cash value, it might be better for you to obtain the down payment sum and buy outright. 

The best cars to look into are ones that retain their book value, both for purchase and the lease agreement option. Why? Your lease agreement does take into account depreciation, so a good resale value will help on cost. However, do read the fine print on your lease contract. If a car is stolen or damaged before the agreement is up, the insurance company may pay the lessor but that amount may not cover all the expenses you have put up front. 

For ideas on the best cars to lease and other "fine print" considerations when leasing or buying, see the Kelly Blue Book, famous for its car valuations.

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