Skip to Content
Auto Stock Image

Is it Better to Lease or Finance a Car?

Thinking about getting a new car? See these pros and cons for buying vehicles versus leasing them.

When it’s time to get a new vehicle, you have to make many decisions. One of those decisions you might have to consider is if it is better to lease or finance a car. While both choices can lead to you securing the vehicle of your dreams, there are advantages and disadvantages associated with each option.

Difference Between Leasing And Buying A Car

When you buy a vehicle, whether with cash or through financing, you are paying for the full cost of the car plus registration, taxes, and other fees. Once you finish paying for the car, it’s yours to keep if you choose to do so.

Leasing a vehicle on the other hand only requires that you pay for the depreciation that occurs over the term of the lease plus other required fees. Once your contract ends, you do not own the vehicle. Instead, you have the option to enter into a purchasing agreement for that car or lease/buy a different vehicle.

Advantages Of Financing A Car

Vehicle Options

Whether you pay for your car in cash or finance the purchase, once it is paid for, you own it outright with access to the title. You can then choose to keep the car, trade it in and use the value to go towards a new or used vehicle, or sell it.

Also, you can sell or trade in your car at any time. Even if it’s three months into a 48-month financing term, you can go to a dealership, and they will buy your car with no fees or penalties to pay.

Mileage and Maintenance

You have the freedom to do what you want to your vehicle when you buy it. There are no rules regarding where you drive, what you use your car for or the number of miles you put on it.

The wear and tear you put on your car won’t require you to make extra payments at the end of your financing term either. These factors can impact the value of the car if you choose to trade it in or sell it in the future, but it’s ultimately up to you.

Disadvantages Of Financing A Car

Financial

Payments are higher when you buy a car because you’re paying for the total cost of the vehicle plus any additional fees. This makes the car a more expensive investment on a short term basis while you are still paying it off.

You will also pay more in sales tax because you are responsible for taxes on the total cost of the car, not just the depreciation as you are with a lease.

Maintenance

Because you are more likely to keep the vehicle you purchase longer, your warranty might run out. A car that’s not under warranty can require that you pay more in maintenance and repair costs over time.

Advantages Of Leasing A Car

Financial

The monthly payments tend to be lower than buying a car because you’re not paying for the full cost of the vehicle. Instead, you are paying for the depreciation over the time of the lease plus any interest, taxes, and fees.

Vehicle Choices

Vehicles available for a lease must meet specific mileage and age standards, so you will have a newer vehicle. Newer cars come with all of the latest and greatest that technology has to offer.

Also, because you will have a newer car, it will remain covered under the manufacturer’s warranty.

At the end of your lease, you can easily turn in your car without the hassle of a trade in or selling your vehicle and continue to get a new car every 2-3 years.

Disadvantages Of Leasing A Car

Financial

There tend to be more upfront costs when leasing which can include the first month’s car payment, a security deposit, acquisition fees, a downpayment, taxes, etc.

If you decide to end your lease early, the fees can be costly, sometimes just as expensive as if you continued to lease through the end of the contract.

Vehicle Options

At the end of your lease, you don’t own the vehicle. Instead, you will have to enter into a purchase agreement to buy the car or lease/buy a different vehicle.

Mileage and Maintenance

There is a limit to the number of miles you can drive during your lease. Usually, your contract will stipulate that you can’t drive more than 15,000 miles per year or you’ll have to pay for each additional mile. The cost of each extra mile can be upwards of 30 cents.

When your lease ends, you might be hit with unexpected costs associated with the condition of the vehicle. Therefore, you could be responsible for hundreds or thousands of dollars in additional fees at the end of your lease.

Deciding If It Is Better To Lease Or Finance A Car

Ultimately, your choice is dependent on your financial situation. You have to consider which option would be better for you, your lifestyle, your ultimate vehicle goals, and your budget.

Whether you need help deciding if it is better to lease or finance a car or you’ve made the decision, and you’re ready to get the process started, at Listerhill Credit Union we are here to help you achieve your vehicle goals.

Learn more

default icon for Solution Finder Intro
What can we help you with?
default icon for Checking For Mature Members
What are you borrowing for?
default icon for Checking For Mature Members
Vehicle Options
default icon for Checking For Mature Members
Home Options
default icon for Carrolls
What are you saving for?
default icon for Carrolls
How old are your kids?
default icon for Cord
Which of these banking options are you interested in?
default icon for Cord
How old are you (or your child)?
default icon for Cord
How old are you?
default icon for Cord
What kind of account are you looking for?
search popup background

What are you looking for?

Common Links

Frequently Asked Questions

  • How do I connect my additional Listerhill account(s) in Online Banking?

    In order to add an additional Listerhill account in Online Banking, please:

    1. Log in to Online Banking through our website.
    2. Click the Accounts tab at the top.
    3. Click “Connect An Account”
    4. To add a Listerhill Account, click “Listerhill Credit Union Account”.
    5. Enter the appropriate information on this screen and select the appropriate account type.
      1. Account Number.
      2. Nickname the Account.
      3. Select the Account Type.
        1. Share Draft – Checking
        2. Share – Savings
        3. Share Certificate – CD
        4. IRA
        5. Line of Credit
        6. Loan
        7. Credit Card
      4. Check the box for Bill Pay if desired.

    Once finished, the new account will be added by the next business day.

  • How do I connect my credit card(s) in Online Banking?

    In order to add a new credit card in Online Banking, please:

    1. Log in to Online Banking through our website.
    2. Click the Accounts tab at the top.
    3. Click “Connect An Account”
    4. To add a credit card, click “Listerhill Credit Union Account”.
    5. Enter the appropriate information on the screen and select the appropriate account type.
      1. Account Number.
      2. Nickname the Account.
      3. Select the Account Type.
        1. Share Draft – Checking
        2. Share – Savings
        3. Share Certificate – CD
        4. IRA
        5. Line of Credit
        6. Loan
        7. Credit Card
      4. Check the Box for Bill Pay if desired.

    Once finished, the new card will be added by the next business day.

  • What if I had merchandise points?

    Cashbackmall will be available for redemption on 9/1/22 for cards converting to cash back rewards from merchandise points.

  • Who is eligible for Cash Back Rewards?

    Cash Back Rewards are available for Listerhill Signature Credit Cards. Signature credit cards require a limit of $5,000 or greater.

  • How much do I get back in Cash Rewards?

    Cash Back Rewards are calculated at 2% on purchases. Cash Advances and Balance Transfers do not earn Cash Back Rewards.