Understanding the Terms

• When leasing a vehicle, you are essentially only paying for a portion of the vehicle's cost, more specifically the part of the vehicle's life that you will be using throughout the course of the loan. At the end of the lease term, you have the option of either buying the vehicle at a depreciated value or ending the loan and walking away. Buying a vehicle, on the other hand, means you pay for the entire cost of the vehicle, regardless of how many miles or any wear and tear you put on it. You can sell or trade the vehicle at any time after purchase.
  
  

Short-Term Costs

• It is important to understand that the short-term costs of the vehicle are substantially less when leasing a vehicle as opposed to buying it outright. The general rule is that lease payments will always be between 30 percent and 60 percent less than it would cost to buy the same vehicle. Even in comparison to offers that include 0 percent financing over the course of the loan, lease payments are usually significantly lower.
  
  

Long-Term Costs

• The long-term costs of leasing a vehicle are always more expensive than purchasing. This is easily understood by thinking about the long-term value a person can achieve from purchasing a vehicle and using it over a long period of time. If a person buys a car and uses it over the course of 15 years, the cost of the vehicle is spread out over that entire period of time as opposed to a lease where the value is distributed over the course of a few years.
  
  

Overall Value

• What most people do not realize is that the medium-length cost of the vehicle ends up being about the same, assuming that the buyer sells the vehicle at the end of the loan term and that the leasee does not purchase the vehicle after the lease is up. The biggest difference is that buyers usually have fewer fees associated with the end of their loan as opposed to those that lease and have to deal with wear and tear and mileage penalties.
  
  

Considerations

• Always determine the specific costs involved with either leasing or buying a vehicle before making a decision.
  
  Be sure to test-drive any vehicle before making a decision to enter into a loan.
  
  Remember that buying or leasing a vehicle always comes down to personal preference and the financial situation of the individual involved.