What Is the Difference Between Leasing and Financing a Car?

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When it comes to car shopping at a dealership, you generally have two options: lease or buy. Each approach has its pros and cons. Before you fall in love with that red 2020 Ford Mustang Coupe or practical Ford F-150, there are a few things to know about leasing and financing. Find out what the difference is between leasing and financing a Ford.

Leasing VS Financing Explained 

The primary difference between leasing and financing a Ford vehicle has to do with ownership. When you lease a car, truck or SUV, you never own it — for as long as you have it, you are subject to the terms of your lease agreement, make monthly payments and return it to the dealership when your contract has expired. Then, you can start a new lease period or choose to buy it.

Ford financing on the other hand, means eventually you'll own the vehicle once the loan is paid off. In general, with financing, you supply a down payment and/or a trade-in that the dealership appraises, and this money is deducted from the agreed-upon sale price. The remainder is folded into a loan that you make payments on each month. At the end of the loan term, you officially own the car and are given the title.

What to Consider When Deciding to Lease or Finance

Costs

With a lease, because you're not buying the whole car, monthly payments are typically lower than monthly payments on a loan. Essentially, what you pay for the lease term covers the depreciation cost for the dealership.

When you finance a car, you're paying towards equity on the vehicle and paying off its depreciation. Generally, monthly payments are higher for financing a car, but there are no additional costs when the loan is paid off.

Mileage Restrictions

Many leases have mileage restrictions. If you drive additional miles at the end of the lease term, you typically have to pay additional costs. But when you finance a car, you can drive it as much or as far as you want without worrying about mileage.

Warranty Protections

Most of the time, warranty protection is better for leasing rather than financing, mostly because the dealership wants to protect its investment. You can still take advantage of various warranties when you finance a car — they just may not last as long or cover as many repairs.

Maintenance costs are generally higher when you finance a car since you still own the car once the warranty expires. With leasing, you might find that the included warranty covers you for as long as you lease it.

Whether you're interested in financing or leasing a new Ford vehicle, you can find what you're looking for at Bob Gillingham Ford. Give us a call at 216-592-9142 to get started.

Categories: Finance
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