Purchasing a vehicle is a big deal and involves numerous decisions that can have long-term impact. And one of the most important decisions you'll make is whether you finance your vehicle through an auto loan vs auto lease. Fortunately, you don't have to make this decision by yourself. The seasoned finance gurus at Glockner Auto Credit can help. 

We specialize in creating tailored automotive finance packages designed to help you save time and money. Specifically, we can help you decide whether a traditional auto loan or auto lease would be best for your unique profile. Let's take a closer look at the ins and outs of buying a car through an auto loan compared to a lease. 

If you have more questions or would like a more tailored solution, don't hesitate to reach out to the team at Glockner Auto Credit today. 

What Is a Traditional Auto Loan?

Purchasing the vehicle through a traditional auto loan is the most common way to procure a vehicle. With this option, you will secure financing through the dealership or through an external bank, credit union, or financial institution. The lender then pays the dealership for the vehicle, so you can drive off the lot. 

Auto loans have set interest rates, terms, and monthly payments. Your term can range from as low as 12 months up to 84 months on certain vehicles. When choosing a term it's important to remember:

  • A shorter term will usually result in higher monthly payments, but will usually result in you paying a lower total vehicle amount. The total vehicle amount is the purchase price, fees, as well as the amount of interest you'll accrue over the life of the loan.
  • A longer term will usually result in lower monthly payments because you are stretching the total amount financed out over a longer period. However, it also means you'll pay more interest over the life of the loan, which will increase the total vehicle amount.

Key Benefits of an Auto Loan

Here are the top benefits of an auto loan:

  • No mileage limits
  • Eventually, you'll own the vehicle
  • You can upgrade or modify it at your discretion
  • You can sell the vehicle at any time once it's paid off
  • Available on both new and used vehicles
  • May be eligible for low special 0% APR on select new models

What Is an Auto Lease?

An auto lease is an increasingly popular way for you to procure a vehicle. Essentially, an auto lease allows you to "rent" a vehicle for a certain number of miles and years. You can typically choose annual mileage allotments of up to 15,000 miles a year and can choose from terms of up to 48 months.

At the end of the lease, you'll have the option to turn the vehicle back in at the dealership and walk away or purchase it for the residual value. Leases are increasing in popularity because they allow you to drive a new, nicer vehicle for much less than you could under a loan. This is because with a lease you only pay for the portion of the vehicle you use vs the entire purchase price. In other words, your lease payment is based on the projected depreciation of the vehicle over your lease period.

Key Benefits of an Auto Lease 

Some of the top benefits of an auto lease include:

  • Lower monthly payments
  • Lower down payment
  • Can drive a new car every few years
  • Most repairs will be covered by the warranty

Should I Choose a Lease vs Loan?

Now that we have provided a general overview of loan vs lease, let's look at how each option fares in a head-to-head analysis based on key factors. 

Up-Front Costs

When buying a car through an auto loan, you may have higher upfront costs because you'll be expected to make a 20% down payment. However, down payments are usually an option. On the other hand, leasing a vehicle can have lower upfront costs. You will be required to pay any applicable "Get-in" fees, which are necessary for you to drive off the lot. 

Monthly Payments

Auto loans will usually have higher monthly payments than a lease. This is because with a loan you are paying the entire purchase price of the vehicle plus any applicable fees and taxes. With a lease, you are only paying for the portion of the vehicle you will use. However, leases will generally have higher finance costs. 

Maintenance Costs

When you purchase a vehicle through an auto loan, you'll be expected to cover all repair costs and maintenance once the warranty ends. Leased vehicles will usually be under a warranty for the duration of the term. 

Wear and Tear

If you lease a vehicle, you'll be responsible for keeping it in good shape. Any excessive wear and tear could result in additional fees at the end of the lease. With a loan, the wear and tear is largely inconsequential and strictly aesthetic unless you sell or look to trade the vehicle in. Then the wear and tear can lower the value of the vehicle.

Mileage and Use

When you purchase a vehicle through an auto loan, you can drive it as much and as frequently as you desire with minimal concern for mileage. If you trade the vehicle in, the mileage can be a factor that lowers its value. On the other hand, most leases have mileage restrictions of around 12,000 miles a year. If you exceed these limits, you'll pay anywhere from $.15 up to $0.30 per mile. This attribute is arguably one of the biggest downsides of leasing.

Customizing the Vehicle

With a traditional loan, you'll enjoy the freedom to customize the vehicle as you see fit. On a lease, however, certain customizations can lead to extra fees at termination or break the lease outright.

Vehicle Ownership

Leases are like extended rental agreements where you will eventually turn the vehicle back in at the end of the term - unless you decide to purchase. With a loan, you are making monthly payments to eventually pay it off. Once you do, the vehicle is yours.

Contact Glockner Auto Credit

When it comes to choosing an auto lease vs loan, there are no one-size-fits-all solutions. What works well for one person may not suit your needs. Because of this, we always take a tailored approach to help our customers choose the best option. 

ContactGlockner Auto Credit today to learn more about your options. 


Hours

  • Monday 9:00am - 6:00pm
  • Tuesday 9:00am - 6:00pm
  • Wednesday 9:00am - 6:00pm
  • Thursday 9:00am - 6:00pm
  • Friday 9:00am - 6:00pm
  • Saturday 9:00am - 5:00pm
  • Sunday Closed