The Difference Between Leasing and Financing

If you’ve started shopping around for a new or pre-owned Volkswagen, you’re likely debating whether to lease vs. finance a vehicle. Neither plan is better than the other, so it all depends on your driving habits and your financial situation. Learn more about the difference between leasing and financing with the Brooklyn Volkswagen finance center!

What Are the Benefits of Leasing?

When you choose to lease your Queens-commuter vehicle, you’re essentially renting it for a temporary term–often three years. Since the loan only covers the value lost from natural wear-and-tear, your monthly payments will be much smaller. Also, with leasing, you don’t have to make as large of a down payment or pay as much sales tax. Additional leasing benefits include: 

• Great Warranty Coverage: Your vehicle will fall under its original manufacturer warranty for the duration of your lease term. This means that you can enjoy even more savings because you won’t have to pay for routine maintenance or repairs. 
• No Value Depreciation: When you finance your vehicle, you risk becoming upside down on your loan–meaning that you owe more on the vehicle than what it’s worth. Leasing allows you to avoid the financial losses that come with depreciation. 

One thing to keep in mind when leasing is that many dealerships don’t allow you to personalize your lease. However, this isn’t the case at Brooklyn Volkswagen. You’re fully within your rights to install aftermarket parts! 

What Are the Benefits of Financing?

While leasing entails renting the vehicle for a certain amount of time, financing involves continuously making payments on the vehicle until your loan is paid off. Once you’ve paid off the loan, you have full ownership of the model. Also, if you’d like to sell your vehicle, you’ll get the funds from the sale. While financing is the most cost-effective path, it does require a bigger commitment. You can expect to make larger monthly payments, make a larger down payment, and pay more sales tax. On the upside is that you would be building equity. Additional benefits of financing include: 

• Building Equity: Because you’ll receive funds from a future sale, part of your monthly payment is an investment in the value of your own assets. 
• Building Credit: When making monthly, on-time payments, and building the value of your asset, you’re much better qualified to secure loans from banks. Also, making timely payments on a large loan like a car loan is a great way to raise your credit score. 

Unlike leasing, which can oftentimes come with monthly mileage limits, when you finance a car, you can drive it as much as you’d like and not have to worry about penalties

Learn More About Leasing vs. Financing With Brooklyn Volkswagen

Still have questions about the difference between leasing and financing? Please don’t hesitate to contact us today! We’ll answer all of your finance questions, as well as help you evaluate your financial circumstances to help determine whether financing or leasing is right for you. In the meantime, be sure to check our helpful car buying tips where you can get expert advice on topics such as refinancing a car loan.