MoneyWisdom Blog

The Pros and Cons of Auto Leasing

Posted by Hanscom Federal Credit Union on Mar 11, 2015 12:03:00 PM

ProsandConsofAutoLeasingWhen deciding between buying or leasing a car, it’s often helpful to write out a list of the pros and cons. Lucky for you, we’ve done the work for you! Please check out the chart below:






You own the car and can keep it as long as you want.

You don’t own the car but get to use it for a predetermined amount of time. It must be returned unless you decide to buy it.

Up-front Costs

The cash price or a down payment, taxes, registration and other fees.

The first month’s payment, a refundable security deposit, down payment, taxes, registration and other fees.

Monthly Payments

Loan payments are usually higher because you’re paying off the entire purchase price of the vehicle, plus interest and finance charges, taxes and fees.

Lease payments are almost always lower because you’re only paying for the vehicle’s depreciation during the lease terms, plus rent charges, taxes and fees.

Early Termination

You can sell or trade in your car at any time and use the money from the sale to pay off any loan balance.

Ending your lease early will likely mean having to pay early-termination charges which may be just as costly as keeping your contract.

Vehicle Return

You are responsible for selling or trading in your car when you want a new one.

Just return the car at the end of the lease, pay any additional costs and walk away.

Future Value

The vehicle depreciates, but its cash value is yours to use any way you want.

The car’s future value doesn’t affect you financially, but you have no equity either.


Drive as many miles as you want.

You’re limited to the number of miles you can drive each year - typically 12,000 - 15,000. You have to pay a per/mile fee if you go over.

End of Term

At the end of your loan term, you’re done! You also have some equity in the car that’s yours.

At the end of the lease, you have to finance the purchase of the car, another lease or the purchase of another car.


You can modify the car - fancy wheels, stereo, bumper stickers - any way you want.

Any modifications you make must be removed before you return the car. You’ll have to pay for any residual damage caused by removing it.


 Lease or Buy

Topics: Cars

Lisa_Taylor_PhelpsContributed by Lisa Phelps

Lisa Taylor Phelps is a nationally known writer and blogger specializing in educational content in personal finance and money management.   For 10 years she worked with credit unions all across the country as a Project Manager at iDiz Inc.  She’s been an active blogger in the credit union community for over 5 years, writing for

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