Differences Between Buying and Leasing

You've decided you want a new car. Should you obtain a loan, lease or pay cash? There are pros and cons for all three. Make an informed choice about what's best for you.

Paying Cash
Only about 10% of all automobile purchases are cash transactions. If you pay the full value of the car with cash up front, it's all yours. However, you also don't have that money available for other uses…investing, emergencies, etc….

Initial Costs
Leasing almost always has one very powerful advantage over a loan: lower initial cash outlay. With leasing, there is normally little initial cash required. Generally, the better your credit rating, the less cash required at the start of your lease.
Occasionally, you will be asked to provide a refundable security deposit (the first and perhaps the last monthly payment) and/or a down payment (or capitalized cost reduction). As with most lease terms, these can be structured to meet your needs. However in most instances, Signature Auto Leasing requires no down payment.

Continuing Costs
Whether you buy or lease, there are continuing costs. Your monthly payment will be the biggest portion. However, there are also taxes, insurance, repairs, maintenance and operating costs.

Taxes
Tax obligations vary by state. In most states, you must pay the entire sales tax up front when purchasing a car. With leasing, you can generally amortize (or spread out) the sales and rental/use taxes over the term of the lease.

Lower Monthly Payments Means More Car
Leases are structured to keep the payments lower than loan payments. Therefore, you can generally add more options or upgrade to a more expensive model than you could afford with a conventional loan.