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The Illinois Insider: Financing Vs. Leasing Your Car

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Key takeaways:

  • Financing involves acquiring a loan to pay the vehicle in full.
  • Leasing a car means renting it for a set period.
  • Go for leasing if:
    • You don’t want to spend a lot of money on a car purchase.
    • You’re not planning on keeping the car for more than a few years.
    • You don’t mind sticking to a mileage limit.
  • Go for financing if:
    • You want to own the car outright.
    • You plan to keep the car for more than a few years.
    • You don’t mind paying more each month.
  • Consider your budget, need for flexibility, and long-term plans when making your decision.

What is the wisest course of action between financing and leasing while shopping for a new car in Illinois? Both options have advantages and disadvantages, so it’s essential to consider your needs, budget, and desires.

 Auffenburg CDJR of Herrin will look at the key difference between financing and leasing to help you choose the most suitable option.

Understanding Car Financing:

When you finance a vehicle, you’re taking out a loan to pay for the entire cost of the car—minus any down payment. You’ll make monthly payments or installments on the loan until it’s paid off, typically three to seven years. Financing allows you to buy and own the car once the loan is paid off. But, of course, you’ll also be responsible for all repairs and maintenance after the warranty expires.

Understanding Car Leasing:

With a lease, you’re essentially renting the car for a set period—usually two to four years. At the termination of the lease, you can turn in the keys and walk away, or you may have the choice to purchase the vehicle outright. With a lease, you’ll likely have lower monthly payments than with a loan, and you may have the opportunity to drive a modern and a newer car more often since leases are typically shorter than loans.

Key differences: Financing vs. Leasing

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  • With financing, you own the car outright and can do it as you please once it’s paid off—within the bounds of the law. You can sell it, trade it in, or keep it until it’s a classic.
  • With leasing, you’re essentially renting the vehicle for a set period and agreed-upon mileage limits. You can either turn in the keys and walk away or purchase the car outright at the end of your lease term.

Monthly Payments:

  • Since you’re paying off the car’s full purchase price together with interest and fees when you finance, your monthly payments will probably be more than they would be if you were leasing.
  • With leasing, your monthly payments will be lower because you’re only paying for a portion of the vehicle’s depreciation plus interest, taxes, and fees.

Down Payments:

  • Car Financing typically requires a larger down payment than leasing.
  • Leasing may require little or no down payment.

Mileage Restrictions:

  • Financing typically has no mileage restrictions.
  • -Most basic leases have an annual mileage cap of 15,000 or less. You can agree to a higher cap, but the monthly price will often go up. This is due to the automobile losing value during the lease. When you return the car, you’ll undoubtedly be assessed an extra price if you go over the yearly mileage cap.

End of Term:

  • With financing, you own the car and can keep it for as long as you want.
  • At the end of a lease, you have several options. You can purchase the car for its residual value, return it to the dealer, or lease another new vehicle.

Early Termination:

  • With financing, you need to make monthly payments to the bank. You can always sell your car while continuing to make regular payments or end the agreement by giving the bank the remaining balance.
  • With leasing, banks have the right to impose termination costs in the event of early termination of the contract. Usually, paying this charge equals continuing to make the first monthly installments.


  • Financing a car means you will eventually own the vehicle outright and can sell it or trade it in for its Kelley Blue Book value. The car’s value will decrease, but you may do anything you want with the equity.
  • With leasing, the car’s value is less of a concern because you will not own it at the end of the lease. The vehicle will have no equity when it is returned to the dealership.


  • Financing gives you the freedom to customize your car however you want. You can add aftermarket parts, paint them, or make any other changes without worrying about violating the terms of your agreement.
  • With leasing, you are usually restricted from making any changes to the car. This is because the vehicle will need to be returned in good condition at the end of the lease.

Wear and Tear:

  • With financing, you are responsible for all repairs and maintenance on the car. This includes scheduled servicing, oil changes, and unexpected repairs.
  • When leasing, you may have to pay for some scheduled maintenance and unexpected repairs, but typically not as much as if you were financing the car. There is also a higher chance that your vehicle will be under warranty for at least part of the lease, which can save you money.


There are pros and cons to both financing and leasing a car. It depends on your circumstances as to which option is best for you. Financing is the way to go if you want to own the vehicle outright and have more freedom to customize it. However, if you wish to lower monthly payments and don’t mind giving up ownership at the end of the lease, then leasing could be a better option. Whichever route you choose, make sure you do your research and understand all the terms and conditions before making a decision.

Auffenburg Chrysler of Herrin, serving Carbondale, IL, will assist you regardless of your credit history. Whether you want to lease a Dodge with affordable monthly payments or buy a used car with enticing financing, our finance department will help you drive away in your dream vehicle.

Get pre-approved now!