Buying vs. Leasing in Saint Cloud, MN

Buying vs. Leasing a Car

Understanding the differences between buying and leasing is key to making an informed vehicle purchasing decision that makes the most sense for your finances, lifestyle, driving routine, and personal preferences.


Who Owns It

There are two ways to buy a car: cash or finance.

If you choose to finance, you will have to meet the lender's requirements, such as a down payment and on-time monthly payments. If you fail to meet these requirements, the lender can repossess the vehicle.

Most people don't have enough cash to pay for a car upfront, so they opt for financing through a dealership, bank, credit union, or private lender. This allows them to cover the vehicle's cost, as well as interest, over a period of three to six years.

To determine the terms and interest rates of your auto loan, lenders will consider factors such as your income, credit score, and the cost of the car. Once the necessary paperwork is signed, the car is yours to do with as you wish.

Upfront Costs

When financing a car, the bank may ask for a down payment for security. Your down payment should be 10% to 20% of the car's MSRP to secure your purchase and lower your monthly payment. You can trade in another vehicle and use the equity as part of your down payment. The amount of the down payment is determined by the lender's requirements and your credit score.

Future Value

New cars lose value over time. Trusted Choice Insurance states that within the first year of ownership, a vehicle can lose almost 20% of its value. The amount of depreciation varies based on factors like market value, make, model, and year of manufacture. Despite depreciation, buying a car can help you build equity if your payments exceed the rate of depreciation. This equity can be used towards your next vehicle purchase. The future value of your vehicle depends on how well you maintain it, so make sure to regularly schedule maintenance with a factory-authorized facility to protect your investment.

End of Payments

After you've fully paid off your contract, you own your vehicle completely. The lending institution will send you a lien release to confirm that the vehicle is paid off and belongs to you.


Who Owns It

When you lease a car, you don't own it. Instead, you pay for the use of the vehicle while the finance institution retains ownership. This is why leasing typically costs less per month compared to buying a car. Leasing also provides protection against unforeseen drops in value. For instance, if the leased vehicle depreciates due to a recall, you won't be affected as much as if you had purchased the car.

Upfront Costs

Leases typically don't require a down payment. Instead, you usually only need to pay the first month's payment, a security deposit, the acquisition fee, and other fees and taxes. However, if you want to reduce your monthly payments, you can choose to make a larger upfront payment, just like with a purchase.

Future Value

In a lease, you don't own the vehicle and don't have to sell it. The financial institution takes care of that. However, there may be mileage limits and wear and tear guidelines. Exceeding them could cost extra when returning the vehicle. Most leases last between two and three years, which is good for people who want a new car frequently. Leasing allows driving a nicer car for less money, especially if buying a cheaper car isn't an option.

End of Payments

Many people choose to return their leased vehicles at the end of the lease term. However, some prefer to purchase the vehicle either during the lease or at the end. There are also those who like to trade in their leased vehicle before the lease is over. It is important to discuss these options with us before signing any paperwork. We will ensure that your lease is set up according to your preferences.

Best Cars to Lease

The best cars to lease are those with the best book value after the term of the lease. Since they depreciate less, you pay less. Review the lease ratings to see which cars retain their value.

Buying vs. Leasing: Which Is Right for Me?

When shopping for a new car, it can be challenging to decide between buying and leasing. To make the right choice, consult with our Ford dealership. Our finance experts will explain the options and help you find a payment plan that suits your finances. At Tenvoorde Ford Inc, our finance center provides leasing and financing options for both new and used vehicles. Contact us online when you're ready to lease or buy your next car.