Is It Better to Lease or Finance a Used Car?

June 24th, 2019 by

BMW, SUV, Car, Automobile, Vehicle
Buying a car is a big decision, and often, people waver between auto financing or getting a lease on a car. The truth is there are no hard and fast rules that can help you make the “right” choice. If you are hard on cash, getting a lease on a used car may seem like a good decision. However, there are plenty of advantages of auto financing a car that you would never get from a leased vehicle.

To help you make an informed decision, let’s take a look at some of the main differences between a leased car and a financed car.


The biggest difference is ownership. No matter how long you lease a car for, you will never be its sole owner. However, when you choose to finance a car, it becomes your property by the end of the financing period. Usually, a typical auto lease term is about 2 to 3 years, and you need to return it to its owner by the end of that time.  You may finance a used car for that period of time, and by the end of it, the car will be yours. However, if you do not have enough money to pay for the car’s monthly payment, you can sometimes make arrangements to purchase the vehicle at the end of your lease period.

Monthly Payments

One major point of concern with financing a used car is that the monthly payment for a used car is typically higher than the monthly payment of a lease. This is because the car buyer is paying off the entire purchase cost of the vehicle, including the interest and taxes incurred on it as well as miscellaneous fees and charges. When it comes to leasing a car, though, the monthly payment of the car is significantly less as you are paying for the depreciation of the vehicle rather than its actual price during the leasing time. You will also have to pay for taxes, interest, and various other charges.

Switching to Another Vehicle

The beauty of financing a vehicle is that once you have purchased it and decide you no longer want it, you may sell it to a third party and use the money from the purchase to pay off any outstanding loan balance. However, you cannot sell off your leased vehicle because it is not your own. In fact, even terminating a lease can cost you money. If you decide to end your lease early, you will have to pay some penalty fees for ending the agreement before your full term. The amount could end up costing you as much as it would have if you had stayed with that vehicle.


If a car has high mileage, its value is further depreciated. If you choose to sell a car you have financed, its mileage will affect its value; however, you will have the freedom to drive the car as much as you want without any restrictions. The same is not true for leased vehicles. A lease comes with certain limitations on the mileage that you can put on your car each year. If your mileage surpasses that number, you will be charged an additional fee on it.

Wear and Tear

Another great thing about buying a used car is that you won’t be answerable to anyone for any wear and tear on it. However, excessive wear and tear will lower the value of your car and this can affect its value in case you decide to sell it. In case of a leased car, any excessive wear and tear on the vehicle will result in a penalty from the owner.

Term End

Once your auto financing term ends, the car will become your sole property, and you will not have any more financial obligations to your car loan provider or auto dealership. You will have total equity of the car, and you can put that towards the purchase of your next vehicle. But in a lease agreement, no matter how much you pay monthly, you will not have any share in the vehicle.


Once your financing term has ended, you can go ahead and make any preferred modifications and customizations to your car. In case of a leased car, you will have to return it to the owner at the end of the lease term. That means you are not allowed to customize or modify it in any way unless you have a way to remove the customization and bring the leased car back to its original state without damaging the vehicle at the end of the lease period.

If you decide on getting a car loan, PA Auto Sales can provide you with some great auto financing options. No matter what kind of credit score you have, we can work with you to help you buy the car of your dreams.

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