Leasing vs Financing: Which is Right for You?
Here at Hall Mazda near Milwaukee, we get a lot of questions about which is better: leasing or financing. We thought we’d put together a crash course on how both work to help you out.
While both options are great, one may be better for your situation. Keep reading to see if you should be leasing or financing your new car.
How Financing Works
Financing is usually the way that people buy a new vehicle. At its core, you take out a loan that covers the entire cost of the vehicle plus the interest. The term length of these loans can be short or long, depending on the buyer’s financial situation. Some factors that affect financing include down payment, annual salary, and credit score. Since car depreciation is not a factor here, financing terms can be much more generous with promotional rates such as 0% APR for 72 months being common. Financing leads to legal ownership of said vehicle, which means you can sell or modify the vehicle whenever you wish. Financing payments are usually larger than leasing, though, since you have to pay for the entire cost of the vehicle plus all the accrued interest.
How Leasing Works
For those unfamiliar, leasing is renting a vehicle. How much you wind up paying is determined by things like lease term and down payment. But, by and large, the price you pay reflects the amount of vehicle depreciation. Take a look at this quick example: you get a three-year lease on a crossover that usually starts at $25,000. Within the next three years, the period you leased it for, the crossover’s value is expected to drop by about $8,000. When all is said and done, your monthly payment will roughly come out to that $8,000 minus the down payment, then divided by 36 months plus interest. This makes for a very affordable rate on many brand-new vehicles. However, when you lease, you don’t own the vehicle. Therefore, you cannot do things like sell or modify it.
Lease or Finance a New Mazda near Milwaukee
Here at Hall Mazda, we have a big selection of highly sought-after Mazda vehicles, like the award-winning CX-5, the newly turbocharged CX-30 Turbo, and many others. Click here to see which financing and leasing incentives are available. And don’t forget to check out our new Mazda Specials.