UCCU: Lease vs. Buy

When buying a car, is it better to finance it through a lease or a loan? The answer boils down to your individual financial situation.

Sara Parker, from Utah Central, Heritage West and Southwest Federal Credit Unions crunches the numbers for us.

If you’re tight on money and you really need a car for transportation, then a lease might be the way to go. If you’ve saved enough money for a healthy down payment or even if you haven’t, you’ll pay fewer finance charges and at the end of the car loan the automobile is yours.

Generally, monthly payments on a car will be higher when it’s purchased through a traditional loan. And the difference could be anywhere from a hundred dollars to more than double what you’d pay with a lease.

The advantage of buying the car through a loan is it’s yours outright once the car is paid off. Leased cars have mileage restrictions and there are surcharges if you exceed the annual mileage allotment. Cars bought outright can be customized and you can sell or trade the vehicle at any time. Also, you don’t have to worry about excessive wear and tear when buying, versus leasing a car.

When the lease is completed, the car is turned in or the owner finances the remaining balance on the car – through monthly payments.

Also, some car manufacturers have curtailed or eliminated their lease programs in reaction to high gas prices. These high prices have undercut the resale value of SUVs and other gas guzzlers – which means those leased cars are worth much less when they are returned.

If you’d like to know more about buying or leasing a car from one of our trained experts please go to www.heritagewestcu.com, www.utahcentral.com or www.southwestfederal.com

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