Understanding Car Financing: Leasing vs. Buying

Key Takeaways

  • Leasing offers flexibility and lower monthly payments.
  • Buying a car can provide long-term ownership and build equity.
  • Both options have pros and cons to consider.
  • Auffenberg Chrysler of Herrin can help you make the right choice for your needs.

Understanding car financing is essential when deciding on your next vehicle. The decision between leasing vs. buying is a common dilemma for many car shoppers. It’s easy to get overwhelmed, as they both have unique advantages and drawbacks that can impact your financial situation and driving experience. Staying informed is the best way to make the process easier!

In this article, we will explore the fundamentals of car financing, including leasing vs. buying, to help you make an informed decision for your next vehicle purchase.


Car leasing is a popular car financing method that allows you to rent a vehicle for a predetermined period. Leasing involves signing a contract with a dealership, which outlines the terms, such as the length of the lease, mileage limitations, and monthly payment amount. 

At the end of the lease term, you can either return the vehicle, purchase it at a 

predetermined price, or lease a new car.

Pros of Leasing

  • Flexibility: Leasing allows driving a new vehicle every few years, making it an ideal option for those who enjoy staying up-to-date with the latest models and technology.
  • Less Maintenance: As leased vehicles are usually new, they are less likely to require significant maintenance or repairs, saving time and money.
  • Tax Benefits: If you use your leased vehicle for business purposes, you can deduct a portion of the lease payments as a business expense.

Cons of Leasing

  • No Ownership: At the end of the lease term, you do not own the vehicle, meaning you have not built any equity in the car.
  • Limited Customization: As the vehicle will be returned at the end of the lease, modifications and customization options are limited.
  • Potential for Additional Fees: Lease contracts may include fees for excess wear and tear or early termination.


Buying a car involves paying cash upfront or financing the purchase with a loan. When you invest in a vehicle, you borrow money from a lender, such as a bank or credit union, and agree to pay back the loan amount plus interest over a specified term. 

Once the loan is paid off, you own the vehicle outright and can keep, sell, or trade it for a new car.

Pros of Buying

  • Long-term Ownership: Buying a car allows you to build equity in the vehicle, which can be used as a down payment for your next car purchase or as collateral for a loan.
  • No Mileage Restrictions: When you buy a car, there are no limitations on the number of miles you can drive, making it a suitable option for those with longer commutes or frequent road trips.
  • Customization: Owning a car provides the freedom to customise and make modifications as desired without worrying about lease restrictions.
  • Potential for Lower Overall Cost: While monthly payments may be higher when buying a car, the overall cost can be lower in the long run compared to leasing, especially if you keep the vehicle for an extended period.

Cons of Buying

  • Higher Monthly Payments: Financing a car purchase typically involves higher monthly payments than leasing, as you pay the entire purchase price.
  • Depreciation: Vehicles tend to depreciate rapidly, meaning their value decreases over time. As a car owner, you bear the entire burden of depreciation.
  • Maintenance and Repair Costs: As vehicles age, they are more likely to require costly maintenance and repairs. Owners are responsible for these expenses, which can add up over time.
  • Longer Commitment: When you buy a car, you are committing to ownership for a longer period than leasing, which may be better for those who prefer driving a new vehicle regularly.

Leasing vs. Buying

The decision between leasing and buying a car ultimately depends on your financial situation, driving habits, and personal preferences. 

When considering these options, ask yourself the following questions:

  • What is my monthly budget for a car payment?
  • How many miles do I drive annually?
  • Do I value driving a new car with the latest features every few years?
  • Am I willing to commit to long-term ownership, or do I prefer the flexibility of leasing?

If you have a tighter budget and value the flexibility of driving a new car regularly, leasing may be the right choice. 

However, buying might be the better option if you drive a significant number of miles annually, prefer to customise your vehicle, and want to build equity.


Understanding car financing, including leasing vs. buying, is crucial for making an informed decision when purchasing your next vehicle. 

Both options have unique advantages and drawbacks, so it’s essential to carefully consider your financial situation, driving habits, and personal preferences.
At Auffenberg Chrysler of Herrin, our team of experts is dedicated to helping you navigate the world of car financing, ensuring you make the best choice for your needs. Visit our dealership today to explore our extensive selection of vehicles and learn more about leasing and buying options. Let us help you drive away in the perfect vehicle for your lifestyle.