So you are in the market for a new car and are tossing around the option of leasing a vehicle instead of buying one. What is the difference and which is the better option?
The answer is that is really depends on your personal situation. Leasing a car means you are financing the use of a car as opposed to financing the purchase of a car. If it is important to you to always have a newer model car with no big repair bills, and lower costs up front then a lease might be a good option for you. If you feel you need to have some ownership in your car, and are looking to eventually pay off the loan and not have any car payment, then you should not lease.
The difference between buying and leasing is fairly basic. When you buy a car you are paying for the whole cost of the vehicle. A typical sale includes a down payment, taxes, and a loan with an interest rate. You can later decide to sell the vehicle or trade it. In a lease, you are only paying for part of the cost of the vehicle. Basically you are only paying for what you use. There may or may not be a down payment, and there is often a security deposit and other fees associated with a lease. At the end of the lease you return the vehicle, or have the option to buy it.
The payments on a loan and a lease are both made up of two parts. A lease payment is made up of a depreciation charge and also a finance charge. A loan payment is made up of finance charge and a principle charge.
There are benefits and drawbacks to both leasing and buying a car. Once you look into both options you can make the decision as to which is better for your personal needs.