Consumers Credit Union

Time to get a different car or truck?

Chances are, you’ll face the question of whether to buy or lease. There are advantages and disadvantages to both, so let’s break down the pros and cons.

Buying

Auto_BuyOnce you pick one out and work out the financing, it’s all yours! And unlike with a lease, which typically has a yearly miles-driven limit (with a hefty per-mile surcharge with any overage), you can drive it as much as you want. Of course, all upkeep responsibility is yours, which is why many buyers opt to purchase an extended warranty.

On the topic of coverage, consider Mechanical Repair Coverage (MRC) and Guaranteed Auto Protection (GAP) for some serious peace of mind. They go the extra mile in protecting you from financial liability in case of breakdowns or accidents. Dealers often offer this coverage, but you can get them from a credit union like CCU, often at a better price.

You also have the option to buy a used car, whereas you can rarely lease used. There’s also the possibility of refinancing if loan rates go down; a great way to lower your monthly payments and/or get a better rate. Finally, once your car is paid off, well, that’s that! No more monthly payments (unlike a lease). 

Also, when you buy, you should have a variety of terms and rates to choose from. Dealer financing can seem like a convenient way to go, but you can also get your loan from a financial institution that might have a better rate.

What’s more, some lenders such as Consumers Credit Union (CCU), can offer incentives like a sixty-day grace period before your first payment is required. To see what else CCU can offer, click here to learn about the benefits of their auto loans and see some current rates.

Auto_AnyMiles Since you own your vehicle you can do whatever you want to it. You can add aftermarket parts, and drive it as much as you want.

Auto_NoWarranty You will either have to extend your warranty once it expires, or pay for out-of-warranty repairs.

Auto_Refinance You can refinance your vehicle to lower your monthly payment, or get a better interest rate on your loan.

Auto_Sell You are free to sell your vehicle when you want. Whatever you make off of your sale can be put toward a down payment on a new car.


Leasing

Auto_LeaseWhen you lease a car, you don’t own it. You are essentially renting it, often with the option to purchase it once the lease term expires. However, unlike renting an apartment, maintenance issues, breakdowns and accidents are often your responsibility. Fortunately, you can get coverage (like a factory warranty or extended warranty) in case problems arise, but when your lease expires the auto is expected to be in top-notch shape for its year and model. 

Generally, you can expect to have a lower monthly payment than if you owned the same vehicle. When the lease term expires, you may then have the option to buy the vehicle if you like it. But sticker shock might be an issue because you have only been paying for the expected depreciation during your lease term rather than the full price of the vehicle. Your payments are not equity in the auto.

Perhaps the best thing you get with a lease is the ability to walk away and get another car when the lease expires – minus any uncovered issues that may have occurred during your lease, leaving the auto in a substandard state. You would have to remedy the issues or pay to have them fixed. Dealers will want to make sure the auto is ship-shape once your lease ends so they can make money reselling it as used.

People who lease cars often do so regularly, though it typically requires a better credit score than buying. The term can be like any car loan, from three to six years. And you tend to get a little more car for the money; again, because you are paying for the expected depreciation and not the full price of the car during your lease term. Just don’t expect to refinance; it is sometimes possible, but it will almost certainly extend the term of your lease (so that “new car” won’t be so new when the lease ends).

What's the difference in cost between leasing and buying? Check out this calculator.

Auto_Warranty

Your vehicle is generally under factory warranty during your lease term, as long as you stay within mileage limits.

Auto_SameRate

You save money with a lower monthly payment, but you'll always have a payment to make while leasing.

Auto_Contract

Your lease payment will stay the same throughout your lease term. It will never change, which will help with budgeting.

Auto Odometer

Leased vehicles have strict mileage limits that could result in extra charges. You also can not make any changes to your vehicle.