Updated May 30, 2019

Factors to consider when shopping for a new set of wheels

Buying a car is so exciting! Hands down, next to education and home buying, it’s one of the largest purchase decisions we make throughout our lives. There’s not always a clear best option, especially when it comes to considering a purchase over a lease. The answer really is … it depends! It’s important to consider your lifestyle to help make the best choice.

At Advia, we can offer you some tips on the car buying process to help you get the very best deal. We can also help you get pre-qualified for financing to ensure you have more bargaining power in the dealer’s showroom. A lease, however, may be a good fit too – so if considering a lease, we want to help you compare the costs and other pros and cons.

The bottom line? Whether you’re looking for the wind in your hair or a cup holder for every child, we want you to get the very best deal on a car you’ll enjoy.

Buying or leasing, which is the better fit?

Traditional Financing

An Auto Loan typically offers more flexibility than a lease and is a great choice if you plan to drive your car longer. You can choose from a variety of terms (36 to 84 months) and, at Advia, in most cases no down payment is required.* Newer cars last longer than those built years ago, and many of us drive our cars long after we pay off the loan.  If that sounds like you, a purchase may be the best way to go.

Depending on the number of miles you drive each year, financing reduces the burden of tracking mileage, as leases typically have built-in annual caps before extra fees are assessed. If you enjoy tooling around town in the summer or have a longer work commute, these types of factors should play a role in your decision.

Another benefit for busy families? While door dings, scratches, and interior staining (someone drop a milkshake back there?!) can be a pain, when you’ve purchased the vehicle via regular financing, you can decide if and when you make the repairs. If the vehicle is leased, you have stricter requirements on making repairs (and could end up getting penalized) since the vehicle technically belongs to the dealership.

The main perk of buy vs. leasing a vehicle? At the end of the loan term, you own the vehicle! You have an asset to your name which you can continue to drive payment free, sell outright, or trade in for a newer vehicle as you wish.

Wondering if an Auto Loan from Advia is a good fit for you? Read online reviews from real people who’ve purchased a car through Advia!

Leasing

Buying is not for everyone, and it doesn’t need to be! We all like driving newer cars, and if you REALLY prefer that over owning, then considering a lease, and the flexibility of trading it in every few years, may be the best fit. With a lease, you can typically get a little more car than your purchase budget might allow, and leasing can be a better choice to make if you tend not to drive a lot of miles, for example, less than 10,000 per year.

There are costs, though, which need to be considered, including added maintenance requirements and coming up with a larger down payment. For instance, a small scratch or dent may not bother you much but could result in you paying a large penalty when your lease is up. And when your lease is up, you don’t own the vehicle.

What is the actual difference between a lease and loan?

  • With a loan, you finance the entire value of the car, and monthly payments are calculated from the vehicle’s full cost, less any trade-in or down payment. When you can lock in at a competitive rate (check out Advia’s current rates), you can count on an affordable, fixed monthly payment. Find out how much your loan payment would be.

In addition to unlimited driving miles, you can modify the car to your personal preferences (sporty hubcaps, nice sound system, heated seats). Maintenance is not as critical either. However, mileage and upkeep can still impact your car’s trade-in value.

  • With a lease, payments are based on the car’s depreciation amount, the difference between the MSRP (Manufacturer’s Suggested Retail Price) and the car’s value at the end of the lease. Similar to a loan, you’ll make payments (sometimes called “rent charges”). You’ll also pay taxes, but there may be other charges too, such as lease initiation and disposal fees.

With leasing, there are almost always more restrictions. And, you’ll need to maintain the car to certain standards or risk paying extra charges. For example, leases have mileage limits with penalties ranging from 5 to 25 cents per mile.  At the end of the lease, usually two to four years, you can either buy the car or lease or buy another.

Check out our Loan vs. Lease calculator to help you make your decision!

What remains the same – whether you choose to buy or lease?

  • Credit Scores Matter – Think your credit score doesn’t factor in when leasing?  Think again … with leasing, you may be turned down, pay a higher lease payment (higher interest), be required to make more frequent payments, or be asked to provide a higher down payment if your score is low. Typically, dealers look for a score of 620 or above when considering to offer a lease. Wondering about ways to boost your credit score? Read our blog!
  • Full Insurance Coverage – Most dealerships require you to carry full insurance coverage on a leased vehicle, which is similar to when obtaining a secured collateral loan with a bank or credit union. Full insurance coverage includes liability and collision/comprehensive.

Making an informed decision.

Summer’s officially here, so why not celebrate with a new car? And whatever option you choose, lease or loan, you’ll feel good sticking to your budget, knowing you did your homework. And when you’re ready to take the next step of searching for your perfect set of wheels, visit one of our partner dealers to make the car buying (or leasing) process even easier!

Have additional questions about leasing vs. buying a car? Or just want to talk with someone about the car buying process? We’re here to help. Contact us, chat with our virtual assistant Ava, or make an appointment with one of our Loan Specialists online.


*Ask a Loan Specialist for more information; there may be times when a down payment is required on an Auto Loan. All loan subject to approval; rates and terms may vary based on creditworthiness of borrower. Advia Credit Union is an equal opportunity lender. Federally insured by NCUA.

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