Buying vs. Leasing

Buying vs. Leasing a Car

Understanding the differences between buying and leasing is key to making an informed vehicle purchasing decision that makes the most sense for your finances, lifestyle, driving routine, and personal preferences.

The following compares the pros and cons of buying and leasing, the economics of each, and why you might choose to finance one way or another.

BUYING

Who Owns It

Buying a car in the DC area can be straightforward whether you pay in cash or finance it with monthly payments—either way, the car is yours.

Financing requires meeting the lender’s terms, such as making a down payment and keeping up with monthly payments. Missing payments could lead to repossession.

Most drivers prefer financing through a dealership like Chevy Chase Acura, a bank, a credit union, or a private lender, spreading the vehicle’s cost over three to six years. Lenders consider your income, credit score, and the vehicle's cost to determine loan terms and interest rates. After negotiations and signing paperwork, the car is yours to enjoy, whether cruising along the Potomac River or navigating Bethesda’s busy streets.

Upfront Costs

When financing, expect the bank to ask for a down payment. Typically, this ranges between 10% and 20% of the vehicle’s MSRP, lowering your monthly payments. You can also trade in another vehicle to contribute towards the down payment. The amount required depends on your credit score and the lender’s policies.

Future Value

New cars depreciate over time, with an average value drop of nearly 20% in the first year, according to Trusted Choice Insurance. Depreciation varies by market value, make, model, and year. Despite this, buying a car can build equity if your payments exceed the depreciation rate. This equity can help fund your next vehicle when you're ready.

Maintaining your vehicle well is crucial to preserving its value. Regular maintenance at a factory-authorized facility like Chevy Chase Acura ensures your car remains in top condition, whether you're commuting through DC or enjoying a weekend drive in Potomac.

End of Payments

Once you’ve completed your payments, your vehicle is entirely yours. The lender will send you a lien release as proof of ownership. Enjoy the freedom of owning your car outright as you drive through the vibrant streets of Washington, DC, and beyond.

LEASING

Who Owns It

When you lease a car, you don't actually own it. Instead, you're paying to use the vehicle, with the finance institution retaining ownership. This is often why monthly lease payments are lower compared to buying a car.

Leasing can shield you from sudden drops in value due to unforeseen issues. For instance, if a recall affects the vehicle's value, it won’t impact you as it would if you owned the car.

Upfront Costs

Leases often require minimal upfront costs. Typically, you'll only need to cover the first month's payment, a security deposit, an acquisition fee, and other fees and taxes. If you prefer to lower your monthly payments, you can opt to pay more upfront.

Future Value

With most leases, you don't end up owning the vehicle, so you won't need to worry about selling it later. The financial institution handles that. However, leases usually have mileage limits (around 12,000 to 15,000 miles per year) and wear and tear guidelines. Exceeding these could incur additional charges when you return the vehicle.

Leases generally last between two and three years, appealing to those who enjoy driving a new car every few years. Leasing might also allow you to drive a more expensive car for less money compared to purchasing one at a lower market value.

End of Payments

Most people return the vehicle at the end of the lease term, but there are other options. Some choose to purchase the vehicle during or at the end of the lease, while others prefer to trade it in before the lease is up. Discuss these options with us before signing any paperwork to ensure your lease is set up to suit your needs.

Best Cars to Lease

The best cars to lease are those that retain their value well. Since they depreciate less, you'll pay less over the lease term. Check lease ratings to identify vehicles that maintain their value effectively.