Lease vs. Loan: Comparing the Benefits of Financing Options

If you're thinking about financing your next vehicle at BMW of Ann Arbor, then you've likely considered whether to choose an auto loan or a new model lease. Both routes for auto financing allow shoppers to split up the cost of a new vehicle into monthly payments. However, that's where the similarities end. Auto loans and model leases have plenty of differences to consider, with each option offering its own advantages and disadvantages.

Below, you can explore the various strengths of both leases and auto loans. With this information, you can make a more informed decision about your next vehicle investment.

Benefits of Leasing

New BMW lease offers are attractive opportunities for many shoppers near Ypsilanti and Westland. Between low monthly payments and vehicle upgrade opportunities every couple of years, it's no wonder so many choose this route as a means to entering the BMW community.

• Lease agreements usually require a lower down payment and more affordable monthly payments than auto loans.
• Since lease agreements typically last anywhere from 18 months to three years, you'll have frequent opportunities to upgrade your vehicle to a newer model.
• Leased vehicles are covered by the original factory warranty. That means peace of mind and lower repair costs.
• You can get more car for the money.
• Turning in your leased vehicle is easy -- you don't have to worry about the hassles of a trade-in process.

Disadvantages of Leasing

The low monthly payments and frequent upgrade opportunities of a lease can be attractive to many shoppers, but there are some concerns to keep in mind as well.

• You won't actually own the vehicle that you have leased. It's more like a long rental. You can buy out the lease at the end of the term, but you'll end up spending more money overall in the long run.
• Lease agreements feature mileage restrictions that can be costly if exceeded. If you have a hefty commute or like to go on frequent road trips, then a lease may not be for you.
• Excessive wear and tear can lead to extra charges at the end of your lease.

Benefits of Auto Loan

An auto loan is a great option if you want the benefits of ownership, but still want the convenience of monthly payments.

• You have full ownership of your vehicle -- feel free to put on as many miles as possible or modify it past its stock form.
• You'll save money in the long-term compared to a lease.
• You don't have to wait until the end of a lease term to part ways with the vehicle.
• Since you own the car, you can put its value toward into a trade-in deal for your next vehicle.

Disadvantages of Auto Loan

Auto loans are quite popular with car shoppers near Canton, MI and Farmington Hills. But there are some disadvantages to keep in mind as well before you submit your application.

• Auto loans require higher down payments and monthly payments. You don't want to end up upside down on your loan, after all.
• The vehicle you own will depreciate as you put money into it.
• Auto loans often take multiple years to pay off.