www.shotcredit.com

There are many different factors to mull over when deciding whether to lease a car or buy a new car. The processes of each are very different, concluding that car leasing is potentially more confusing of the two due to its vast terminology. However, below are some simple comparisons to help you decide which avenue is best for you.

Car Ownership

BAD CREDIT CAR LEASING: When you lease a car, you do not own the vehicle. A leasing company usually owns the vehicle, and lets you 'rent' it over a specified period. You get to use it, but must return it at the end of the car lease unless you choose to buy it.

BAD CREDIT CAR BUYING: You own the vehicle and get to keep it at the end of the term.

Up Front Cost

BAD CREDIT CAR LEASING: Up-front costs may include the first month's car payment, a refundable security deposit, a capitalized cost reduction (like a down payment), taxes, registration and fees, and/or other charges.

BAD CREDIT CAR BUYING: Up-front costs include the cash price or a down payment, taxes, registration and fees, and/or other charges.

Monthly Car Payments

BAD CREDIT CAR LEASING: Monthly car lease payments are usually lower than monthly car loan payments because you are paying only for the vehicle's depreciation during the car lease term, rent charges (like interest), taxes, and/or fees.

BAD CREDIT CAR BUYING: Monthly car loan payments are usually higher than monthly car lease payments because you are paying for the entire purchase price of the vehicle, interest, and/or other finance charges, taxes, and fees.

Early Termination

BAD CREDIT CAR LEASING: You are responsible for any early termination charges if you end the car lease early.

BAD CREDIT CAR BUYING: You will not be subject to a buy-out charge if you end the car loan early.

Vehicle Return

BAD CREDIT CAR LEASING: You may return the vehicle at lease end, pay any end-of-lease costs, and "walk away."

BAD CREDIT CAR BUYING: You will have to sell or trade-in the vehicle when you decide you want a different vehicle.

Mileage

BAD CREDIT CAR LEASING: Most car leases limit the number of miles you may drive (often 12,000-15,000 per year). You can negotiate a higher mileage limit and pay a higher monthly payment. It is likely that you may have to pay charges for exceeding those limits if you return the vehicle over its allotted mileage limit. The cost per mile over its limit is usually 10 to 15 cents per mile.

BAD CREDIT CAR BUYING: You may drive as many miles as you want, but higher mileage will lower the vehicle's trade-in or resale value.

Excess Wear

BAD CREDIT CAR LEASING: Most car leases limit wear to the vehicle during the lease term. You will likely have to pay extra charges for exceeding those limits if you return the vehicle.

BAD CREDIT CAR BUYING: There are no limits or charges for excessive wear to the vehicle, but excessive wear will lower the vehicle's trade-in or resale value.

End of Term

BAD CREDIT CAR BUYING: At the end of the car loan term (typically 4-7 years), you have no further car loan payments.