Buying vs Leasing

When you look for your perfect ride at Rob Green GMC in Twin Falls, ID, you’re probably expecting to buy it when you step into our Finance Department. But did you know that leasing is also an option with many vehicles in our inventory? Discover the pros and cons of each of these alternatives.

Why Buy?

The more traditional route to getting a car is to buy. After either paying the full price in cash or completing an auto loan, you own the vehicle free and clear with no more monthly payments. You can drive it anywhere for as many miles as you want, including across the border. The exterior and interior can be upgraded with custom parts and accessories.

You also don’t have to worry about wear and tear, or a few dings, except for the effect it may have on your enjoyment. When you want some extra cash, you can sell your car to another person or a dealer. If you’re after a new vehicle at our dealership, you can trade in what you for a discount on the purchase.

Qualifying for a car loan is generally easier than for a lease but it will cost you more in the short run. You typically have to make a down payment and pay taxes, license, and registration, which costs you more out of pocket. Your monthly payments are generally higher than with a lease.

If you decide to put little to no money down, you may end up “upside-down” on the loan or have negative equity. This means that you owe more on the vehicle than it is worth. You’ll then find it difficult to sell or trade-in your car because the money you receive will be less than the value of the car. This happens because new cars depreciate by as much as 25 percent a year and the only way out is to ensure that your down payment is at least equal to the depreciation.

Why Lease?

Leasing is similar to a car rental but it goes on for 12 to 36 months. Because you are paying for the use of the vehicle, your monthly payments are lower. Many businesses can deduct the full cost of the least from their taxes.

You do need to make an initial payment that includes the first installment, an acquisition fee, taxes, license, registration, and a refundable security deposit. You can also contribute an optional down payment.

At the end of your lease, you turn your vehicle in without further financial obligation. You can also buy the vehicle or sign up for a new lease. Because you’re gaining a new vehicle every 1-3 years, you always have the latest technologies and the advanced engineering of a new car. Your vehicle is always under warranty and, in Nissan’s case, the first scheduled maintenance within the first year is free.

Because you never own the vehicle, you’re on the hook for monthly payments for as long as you want to drive. You’re limited to traveling only 10,000 to 12,000 miles although you can negotiate for higher limits. If you exceed your number, you’ll need to pay extra per mile. You cannot normally take your car to Canada or Mexico.

Modifications are not allowed: you need to return the vehicle in as original condition as possible. You need to avoid excessive wear and tear, or damage. Otherwise, you’ll need to pay extra fees. Terminating the lease early can be just as expensive as continuing the contract.

Your Credit Score

Your credit score is a number between 300 to 830 that summarizes your creditworthiness. It comes from your credit history with higher numbers being better. Lenders like to see scores over 700 with those over 800 receiving the lowest interest rates and the best terms. A score below 670 is considered poor and saddles you with the highest interest rates, assuming you can get a loan.

To find out your score, ask for your credit report, which is free once a year from each of the major credit bureaus: Equifax, Experian, and Transunion. The quickest way to obtain it is through AnnualCreditReport.com. Go through the report to make sure that no errors are affecting your score. If you find any, tell the merchant who reported the transaction, so they can correct it.