Most consumers default to using a loan to pay for a new car. However, leases also possess distinct benefits and drawbacks. Understanding the differences between car loans and leases will enable you to make more informed decisions when you visit our Mazda financial service department.
Payment Structures
Both car loans and leases last a certain number of months and have a set interest rate. Either your car dealership or a bank will calculate these metrics using your credit score. The interest on a car loan is essentially a fee you pay to borrow money from a lender. A lease’s interest serves a similar purpose, though it also acts as a contingency if the car becomes inoperable.
Model Availability
Your budget greatly impacts which new models you can afford and purchasing a vehicle with an auto loan will typically incur higher monthly payments than leases. Some technology, safety, and performance features only exist at certain trim levels.
In contrast, leasing means that you can constantly replace your vehicle with the newest model available. Because your monthly lease payments cover the vehicle’s depreciation, but not its entire value, you may afford a higher-priced vehicle than if you bought one.
Ownership
Once you pay off a car loan, your only recurring costs involve repairs, maintenance, and optional modifications. If you keep your car in good condition, you can continue driving it long after your loan ends, and your mileage exceeds the manufacturer’s initial warranty.
Leasing a car amounts to smaller payments in the short term, but successive leases lead to greater expenses in the long term. Though you may receive some maintenance and repairs at a reduced cost, or free of charge, you cannot personalize your car, because you must undo those modifications when you return it. You also cannot drive your car as much as you want, because you must pay a fee for each mile you have driven over the limit set in your lease contract.
Discuss Loan and Lease Options at Sentry West MAZDA
To determine whether loaning or leasing suits you best, consult with the finance department at Sentry West Mazda.
Connect with us
Archives
