Finance vs. Lease - Hutchinson, KS

At Midwest Superstore, we're here to help you understand everything there is to know about car shopping. This guide will help you understand the difference between financing a new car and leasing one.

Financing a New Car

When you want to buy a new car, you have to be able to finance it. If you don't want to pay the full amount in cash, you'll have to take out a loan. You'll obtain this from a financial institution, like a bank or a credit union, or directly from a car dealership.

When you get the loan, you'll negotiate with the lender on the length of the loan, the monthly payment, and the interest rate. These things are affected by how much you have to make as a down payment, as well as by your credit score.

Financing a car means that you're paying for the entire thing; when the loan is paid off, the car is officially yours. In the long run, you get more value out of owning a vehicle for its entire life than leasing temporarily.

Leasing a New Car

Unlike financing, when you lease a new car it's never actually yours. Leasing is akin to renting for a few years. It lets you get the best of a vehicle but then asks that you return it when the lease is up. When you lease, you're paying for the car's depreciation during this time. That cost is much lower than the entire value of a vehicle, so the monthly payments on a lease are lower than those on a car loan.

Also, most leases have much lower down payments - or no down payment at all. With that being said, leasing can be a great option if you're trying to get a new car on a budget. However, leases do come with restrictions on things like mileage and customization.

For more information about buying or leasing your next vehicle, visit us or stop by Midwest Superstore and speak with a representative from our finance department.