Auto Financing: Lease vs. Loan

Most shoppers who take home a Ford Escape, Fusion, Explorer or F-150 from Broadway Ford of Green Bay choose either a lease or loan option. So, which option is right for you? We've broken down the pros and cons of both below. Take some time with the descriptions to figure out which you might prefer.


Leasing Advantages

Lower Payments: Both your down payment and your monthly payments could be significantly lower with a lease than with a loan. That's because these lease payments work toward paying for the cost of depreciation, rather than the total cost of the vehicle. With these lower payments, a lease could allow you to get behind the wheel of a higher end vehicle or trim level.

Warranty Coverage: Leased vehicles are covered by Ford's factory-backed new-model warranty. This warranty can reduce the cost of repairs if they're needed and provide great confidence for any trip.

Easy, Frequent Upgrades: Most lease agreements last for two or three years. When the term is finished, it's an easy process to upgrade to a newer model. If you prefer to get a new vehicle every couple of years, a lease may be right for you.

Potential Leasing Challenges

Mileage Limit: Lease agreements include yearly mileage limits for the vehicle -- typically between 12,000 and 15,000 miles. If you go over the limit the extra charges can be substantial. These mileage limits are something to consider if you have a long commute or if you go on lots of road trips.

No Ownership: A lease does not grant ownership of a vehicle. Rather, it acts much like a long-term rental. You'll be able to borrow the vehicle from the dealership in exchange for agreed upon terms.

No Modifications: If you like to modify your vehicles, a lease may not be your best options. Lease agreements usually have strict limits on modifications and upgrades in order to keep the vehicles close to stock.

Wear and Tear Charges: At the end of the lease term, the vehicle will undergo and inspection. If the technician finds excess wear and tear, you could face steep charges.

Loan Advantages

Full Ownership: Unlike a lease, a loan allows you to take ownership of your vehicle -- you won't have to return it to the dealership. Instead, a lender provides the money to purchase the vehicle. Then, you pay back the lender with agreed upon rates and payments.

Free to Modify: Since you own the car, you can modify it to your liking. Whether you're interested in aesthetics or performance, a loan means you'll be able to upgrade your vehicle exactly the way you want.

Unlimited Mileage: There's no mileage limit with a loan, so go ahead and take that cross-country road trip.

Flexibility: You can sell or trade in your car whenever you want -- you don't have to wait for the end of a lease term to upgrade.

Potential Loan Challenges

Higher Payments: With a loan, you're paying back the value of the vehicle plus interest. That means your down payment and monthly payments will likely be higher than those of a lease.

Less Frequent Upgrades: Loan terms usually last for several years. There's no guarantee of an available upgrade every couple of years.

Depreciation: Buying a car with a loan is a more significant investment, which means you can lose money on depreciation.


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