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Finance vs. Lease

Financing & Leasing a New Vehicle

Investing in a New Toyota is a huge decision, so you want to make sure you are well-informed of your options. When comparing financing to leasing, neither is superior. Rather, one may fit an individuals lifestyle and financial choices better than the other. We have created this page as a tool to help you navigate the pros and cons of each route. Click the dropdown below to learn more!

Ownership

  • Financing: The vehicle belongs to you once it is paid in full and you can keep it as long as you wish to. When financing a vehicle, it is important to consider any costly issues that may arise during your ownership. We recommend add-on Vehicle Protection Plans when you purchase to avoid any unexpected costs during your ownership.
  • Leasing: The vehicle does not belong to you and you must return it at the end of your agreement.

Up-Front Costs

  • Financing: Costs can include a down payment and registration fee. However, it is possible for these fees to be worked into the loan leaving you with no up-front costs
  • Leasing: Costs can include the first months payment on the vehicle, down payments, registration and other fees.

Vehicle Payments

  • Financing: Loan payments are typically higher because you are paying for the vehicle in its entirety, plus interest. Any additional fees you may have added onto the loan rather than paying up-front will also contribute to this cost.
  • Leasing: Lease payments are typically lower than financing payments. You are only paying for the vehicle’s depreciation for the duration of your lease, rather than the vehicle in its entirety. This amount may also include interest charges and other fees.

Early Termination

  • Financing: You can sell or trade-in your vehicle whenever you choose to. The money you receive from the sale or trade-in can be used to pay off your current loan. However, if your loan exceeds your vehicles worth, you may become upside down on your loan. Any remaining balance will have to be transferred to your new loan or paid in full.
  • Leasing: The lease can be ended early, but early termination can become costly depending on your lease terms.

Vehicle Return

  • Financing: You are responsible for selling or trading in your vehicle when you choose to get a new one.
  • Leasing: You return the vehicle at the end of your lease and walk away. However, you can choose to purchase the vehicle which is referred to as a “lease buyout”.

Future Value

  • Financing: Your vehicle will depreciate as time passes, but whatever cash value it does hold belongs to you.
  • Leasing: The future value of your lease doesn’t effect you. However, you will not have any equity if the vehicle becomes more valuable according to the market.

Mileage

  • Financing: The vehicle is yours to put as many or as few miles on it as you wish. If you intend to trade-in sometime in the future, be mindful that less miles on the odometer leads to higher trade value.
  • Leasing: Leases typically limit the amount of miles driven yearly. Most often the mileage will range between 10,000-12,000, additional mileage can be added at an additional cost.

Wear & Tear

  • Financing: Wear and tear on a vehicle you own is to be expected. The only downfall of this may be a lower payout if you sell or trade the vehicle in the future depending on the damage.
  • Leasing: You will be liable for excessive wear and tear on the vehicle beyond the “normal” expectation. One way to prevent these charges is opting into the Excessive Wear & Tear Protection Plan that we offer.

End of Term

  • Financing: When you have completed your loan payments, the vehicle is 100% yours. Whatever equity you have gained from your vehicle is yours to keep or put towards your next vehicle purchase.
  • Leasing: When your lease contract is up you can either purchase the vehicle, lease another, or choose to purchase another vehicle. The choice is yours!

Customization

  • Financing: The vehicle is yours to modify in the way you choose, but be mindful that certain changes may void certain warranties.
  • Leasing: Any added customizations must be temporary. Any residual damage you will be responsible for getting fixed.

Summary 

Financing: The process of purchasing a New Toyota or Pre-owned Vehicle is fairly straightforward. With the guidance of our finance department you will apply for a vehicle loan from a bank or credit union of your preference. You will either be denied or approved for the loan for a fixed period of time with a set interest rate. For each monthly payment made on the loan a portion of the payment applies to the interest, and another portion applies to the principal. While you are actively paying towards the principal of your vehicle, equity is building up until the end of the loan. Once you complete your loan payments, the vehicle is yours to do with whatever you wish. When purchasing, we recommend considering our optional Vehicle Protection Packages to protect yourself from any unexpected costs on your vehicle.

Leasing: The process of leasing a New Toyota can be slightly more complex, but may be a better option for various reasons. Leasing takes out the unpredictability of purchasing a Pre-owned Vehicle. Since you are driving it at the prime of it’s condition, any unexpected repair costs are taken out of the equation. Even your regular maintenance costs will be covered for the majority of your lease term thanks to ToyotaCare’s complimentary 2-year/25,000-mile coverage. One of the most significant benefits of a lease is your ability to walk away without taking a loss on the vehicle. The payments you are making account for the depreciation over the duration of your term (plus interest). This means if the trade-in value drops, you are not responsible for that loss and you can simply walk away at the end of the lease term.

Conclusion: While there are benefits with both financing and leasing, there are negatives as well. We have broken down some of those points for you to decipher which option better fits your lifestyle. If you are still unsure, our finance department is here as a resource. We want you to feel confident in the decision you are making, so we are here to help in any way we can. If you have questions, don’t hesitate to reach out!


 

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Anderson-Weber Toyota 42.4897639, -90.7200979.