At Mike White Ford, we sell both new and used vehicles, offering a variety of car and truck models. We also offer our customers different financing options, knowing that each of our customers is unique. Our sales and financing team will do its utmost to craft a financing arrangement that will suit your needs.
The decision to acquire a vehicle is a significant financial commitment. For many people, apart from purchasing a home, buying a car is one of the largest financial transactions they will make throughout their lives. Selecting a vehicle and working out the financial details requires careful consideration of many factors, including budget, practical long-term needs, and lifestyle.
Frequently, considering these factors will suggest that a customer should entertain leasing a vehicle rather than purchasing it. But whether you lease or buy, each option presents distinct advantages and disadvantages, which you should thoroughly evaluate before deciding.
Pros and Cons of Purchasing a Car
Buying a car is generally a straightforward proposition. Typically, you select the vehicle you want and then work with a financing specialist to work out the details. While some people can pay cash for a car, others need financing. Within financing options, there are several factors you need to determine:
- How much money you want to put toward a down payment
- The financing term – that is, for how long you want your payments spread out, usually anywhere from 36 to 84 months (3 to 7 years)
- Available interest rates, which usually depend on the financing institution and your credit rating (although special promotional rates are sometimes available)
- Any options you want to add, such as an extended warranty or a maintenance plan
Choosing the right financing package will depend on your priorities and how much you want to pay monthly.
Lenders will require you to insure the vehicle at a particular level, which may be higher than what state law requires. Once you complete all your payments, you will obtain the title to your car and have full ownership.
One advantage of buying a car is that you are free to customize it as you wish, and there are no limits on how many miles you drive or how you maintain it. As you make payments on the vehicle, your equity – the proportion of the car you own versus how much you owe – increases until you own the vehicle entirely.
On the downside, purchasing a car means carrying the vehicle’s entire value on your loan. This can mean a higher outlay of funds upfront in the form of a higher down payment and monthly payments. Because of this higher outlay of funds, buying also means that you may have to compromise on which car you buy, as you may not be able to afford the model and package you want.
As the vehicle ages, you will have to confront repair costs from wear and tear. If anything happens to the car that affects its appearance, such as a dent or scratch, you can fix it or leave it as is. The same is not true of a leased vehicle.
Pros and Cons of Leasing a Car
Leasing involves a contractual agreement between you and a dealership or leasing company to use a vehicle for a specified period, typically two to four years. During the lease period, you will make monthly payments based on covering the depreciation of the vehicle’s value over that period. In contrast to renting a car, in which you are simply paying to use a car, leasing is more like purchasing a portion of the car’s value during the time you use it.
Leasing offers several advantages. First, leasing often entails lower initial costs, including a smaller down payment and lower monthly payments than purchasing an identical vehicle. Consequently, you can sometimes afford to lease a car that you might not be able to buy. Second, leased vehicles are typically new, which means they will be under warranty, and most repairs will be covered. Using the vehicle within the warranty period means that maintenance and repair costs are off your shoulders during the lease term.
Leasing does have some drawbacks. When you enter into a lease, you are bound by its terms, including mileage limitations and prohibitions on vehicle modifications. You may also be locked in for the entire term, even if your life situation changes. For example, if you run into financial difficulties and want to terminate the lease to relieve yourself of the payment burden, you will likely be subject to penalties or other costs.
With a lease, you never acquire equity in the vehicle. While you usually have the option to purchase the car after the lease term is up, you may ultimately pay more than if you had purchased the vehicle outright from the beginning. You will still have to insure your leased car and are responsible for fixing any cosmetic or structural damage to the vehicle when your lease term is up.
Choosing Between Leasing and Buying
Several factors may push you in one direction or another. If you like driving a new car and want to avoid the hassles of repairing an older vehicle, leasing may be the way to go. Leasing enables you to drive a new or nearly new car every few years, meaning you can access the latest models without the long-term commitment of ownership. So long as you are comfortable with the restrictions and downsides, you may enjoy being relieved of the responsibilities of owning a car.
Ultimately, neither leasing nor buying is inherently superior; deciding to lease or buy a car will depend on your circumstances, budgetary constraints, and lifestyle preferences. At Mike White Ford, we also offer a Flex Buy option that enables you to purchase a car with a lower monthly payment for the first three years. In some cases, a couple may find that it makes sense to lease one vehicle and purchase another based on how each car will be used. The important thing is to evaluate the pros and cons of each option and make an informed decision that aligns with your needs and priorities.
If you have questions about vehicle leasing through Ford or are interested in purchasing or leasing a new Ford, contact Mike White Ford, with showrooms in Coeur d’Alene and Sandpoint. You can count on us to help you find an arrangement that works for you.