Lease or Finance

Leasing vs Financing: Understanding the Differences

When it comes to getting a new Nissan vehicle, you have two primary options: leasing or financing. Each option comes with its own set of advantages and disadvantages, so it is important to understand the differences before making any decisions or signing any paperwork. At Sherwood Nissan, we offer both options to ensure we can meet every driver’s needs. By visiting the dealership, you can learn more about what each has to offer, however, you can also get started right here and explore the benefits, drawbacks, and key factors to consider when choosing between the two.

Overview of Leasing

Leasing a vehicle is similar to leasing an apartment. You enter into an agreement with the leasing company and make monthly payments for the use of a particular vehicle over a specific period of time. When the leasing agreement comes to an end, the vehicle must be returned to the dealership. In some cases, the driver will make an offer to purchase the vehicle from the dealership, but typically the vehicle is returned and a new one is purchased or leased at that time.

The Benefits of Leasing

Lower Monthly Payments:

One of the primary benefits of leasing is the lower monthly payments compared to financing. Since you're only paying for the vehicle's depreciation during the lease term, rather than the full purchase price, your monthly payments are typically more affordable. This is a great way to get a new car without the large down payment or monthly fees.

Access to Newer Vehicles:

Another great benefit to leasing is that it allows you to drive a brand new vehicle with the latest features and technology, and continue getting upgrades every couple of years. Lease terms typically range from two to four years, after which you have the option to return the vehicle and swap for a newer one. Those who prefer and enjoy always having the newest models will really enjoy leasing.

Limited Ownership Responsibilities:

The final significant pro to leasing a vehicle is the limited ownership responsibility. When leasing a vehicle, you are not responsible for the long-term ownership costs, such as maintenance and repairs. Most leases include a manufacturer's warranty that covers repairs during the lease term, reducing your out-of-pocket expenses. This can be a serious game changer.

Understanding Financing

Financing, also known as purchasing or taking out a loan, is the most common way of getting a new vehicle. This involves borrowing money to pay for the vehicle's full purchase price. Over time, you make monthly payments until you fully own the vehicle. At that time, the vehicle is yours and you no longer have to make payments on it. Simple and easy.

Benefits of Auto Loans

Ownership & Equity:

The most significant advantage of financing a vehicle is that you are making monthly steps to ultimately become the owner. With each payment, you build equity in the vehicle, and once you complete the loan term, you own the vehicle outright. This ownership provides you with the flexibility to modify, sell, or trade-in the vehicle whenever you choose.

No Mileage Restrictions:

Unlike leasing, financing a vehicle does not come with mileage restrictions. You are free to drive as much as you want without incurring additional charges or penalties. This flexibility is particularly beneficial for individuals who have long commutes or frequently embark on road trips. If you don’t want restrictions, financing might be best for you.

Total Cost of Ownership:

While monthly payments for financing are typically higher than leasing, it's important to consider the total cost of ownership over the vehicle's lifespan. Once you've paid off the loan, your monthly expenses reduce significantly since you no longer have a payment obligation. Building this equity over time is quite valuable.

Factors to Consider

Before deciding between leasing and financing, several factors should be considered to align with your financial goals and personal preferences. You need to decide if you want lower monthly payments or building blocks toward ownership. You will need to think about whether you do a lot of driving or minimal. Will mileage restrictions hold you back? And finally, consider your desire, or lack thereof, to customize your vehicle with aftermarket modifications or alterations. Each of these factors plays into whether you should lease or finance your next vehicle.

Should You Lease or Finance Your Next Vehicle?

Deciding whether to lease or finance isn’t always easy because there are pros and cons to each. If you still have questions or want to weigh the options with a professional, contact us at Sherwood Nissan today. We will help you make your final decision and find the best leasing or financing package out there for you.