Leasing vs Buying
Trying to decide between leasing or buying your next car? While there is no universal answer to which path to take, your best option depends on your lifestyle and driving habits around Plainfield, Bloomington, and Indianapolis, Indiana.
Our Andy Mohr Automotive Group team is here to break down the differences in a way that makes sense, so you can make a confident choice. Let’s take a closer look at what each path offers.
Buying a Car: How Auto Loans Work
Buying a car means you’re working toward full ownership. Most people finance their vehicle with an auto loan, then pay it off over time, which is usually between 36 to 72 months. You’ll own the vehicle once the loan is paid off, and there are no limits on mileage or how long you keep it.
Down payments are typically around 10–20% of the vehicle’s value, and buyers should budget for things like taxes, registration, and documentation fees. The good news? Once you’ve paid it off, it’s all yours with no more monthly payments and potential resale value in your pocket.
Leasing a Car: A Flexible Short-Term Option
Leasing is more like renting. You pay monthly to drive a new vehicle for a set term, which is usually two to three years, then return it when the lease ends. Monthly payments tend to be lower than a traditional loan and your lease may even include warranty coverage and prepaid maintenance.
You’ll typically need to cover the first month’s payment, a security deposit, and registration fees upfront. Lease agreements come with mileage caps (often 12,000 to 15,000 miles per year), so this option works best for drivers who stay local or have a short commute.
The Key Differences: Ownership, Flexibility & Costs
Once you understand the basics of buying and leasing, it helps to see how they really stack up in everyday terms. Here are some of the core differences that can impact your experience as a driver:
Ownership: Buying means you’ll eventually own the vehicle outright. You can keep it as long as you want, trade it in, or sell it down the line. Leasing, on the other hand, is more like borrowing and you return the car when the term ends.
Flexibility: Leasing gives you the option to drive a newer car more often, which is ideal if your needs might change soon. Think about upgrading to an SUV when you start a family or switching to something more fuel-efficient if your commute shifts. Buying is the better long-term move if you like the idea of one car you can rely on for years to come.
Mileage and Wear: Lease contracts usually limit how many miles you can drive per year, and you’re expected to keep the vehicle in good condition. If you go over the limit or return it with heavy wear, you’ll likely pay extra. With buying, you won’t have to worry about restrictions or penalties.
Monthly Costs: Leasing generally gives you lower monthly payments because you’re only paying for the car’s depreciation during your lease term. With buying, monthly payments are usually higher, but once the loan’s paid off, the car is fully yours and the payments stop.
Every driver’s priorities are different, so thinking through how these tradeoffs line up with your lifestyle can help you make the right call.
Which Is Right for You?
Choosing between leasing and buying isn’t always black and white. The best option will depend on your lifestyle, finances, and how you see your next few years on the road. To help you narrow it down, consider these questions:
- Do I plan to keep this vehicle for more than five years?
- How many miles do I drive per year?
- Am I comfortable with a larger upfront cost in exchange for long-term savings?
- Will my vehicle needs change in the next few years?
- Do I want to build equity for my next car?
The answers to these questions can help point you in the right direction. But if you're still weighing your options, we're here to help you talk it through.
Leasing vs Buying FAQs
What do “money factor” and “residual value” mean?
The money factor is essentially the lease’s interest rate, and you can determine that interest rate by multiplying the money factor by 2,400 as U.S. News & World Report explains.* Residual value is the car’s estimated worth at lease-end and helps determine your monthly payment.
Can I lease a car with bad or no credit?
We work with various credit levels. A higher payment or larger down payment might be required, but we’ll help explore your options.
Who handles maintenance and insurance on a lease?
Routine upkeep and insurance are your responsibility, but most leases fall under the factory warranty, which covers many repairs.
What happens at the end of my lease?
You can return the car, lease a new one, or buy your current vehicle.
What fees might I pay when the lease ends?
Possible fees include extra mileage, wear and tear, a disposition fee, or unpaid charges. Staying within your contract terms helps avoid them.
What do I need to lease a car upfront?
Expect to pay a down payment, first month’s payment, taxes, and a refundable deposit. We’ll give you a full breakdown beforehand.
Let’s Talk Leasing and Financing Offers
Our Andy Mohr Automotive Group team is here to help you compare your options and guide you toward the right fit. We work with trusted lenders and offer exclusive incentives, so you can drive off with a payment plan that makes sense.
Explore our current inventory to find your next vehicle, and contact us to learn more about your financing and leasing options. We’ll help you move along the roads of Plainfield, Bloomington, and Indianapolis, IN, with confidence.