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On average, you'll face a choice of whether to lease or purchase your next vehicle about every four years. The question of whether you should lease or buy isn't one with an easy answer because the right answer will depend on your individual situation and what you want to get out of your next new vehicle. At Subaru of Puyallup, we want to help you make the most cost-effective decision, which is why we've compiled this informative page to assist you in choosing which scenario is right for you.
When financing a new Subaru, you have two choices: a purchase loan or a lease. When you lease, you're financing the use of a vehicle as opposed to getting a purchase loan where you finance the vehicle itself. The biggest difference: when you lease, you don't own the vehicle. When you purchase, you own the vehicle. In either scenario, though, you're required to make monthly payments.
Read on to learn more about the facts that go along with both leasing and buying a new vehicle. We believe that by giving you the information you need up front, it will better equip you to make the decision that's right for you so we can help you drive off in the new Subaru that's a perfect fit for your lifestyle and budget.
When you choose to purchase a new Subaru from Subaru of Puyallup, you agree to pay the agreed-upon price of the vehicle in full. Whether this happens in the form of a one-time cash payment (which is rare) or monthly payments on a loan in the amount of the purchase price plus taxes, interest and fees (more common). When you do finance the purchase of a new vehicle, you'll most likely be required to make a down payment and your interest rate will be determined based on credit history. When you purchase a vehicle, you have the option of trading it in before the loan is paid off (providing the value of the vehicle exceeds the amount remaining on the loan). One of the positive aspects of buying a vehicle is that you have no mileage restrictions and you can personalize the vehicle any way you see fit.
One of the factors that makes leasing a new Subaru attractive to many buyers is that the cost of leasing is far less than the cost of buying. The reason for this is simple: you don't own the vehicle, you're paying for the use of the vehicle over a specific period of time. A monthly lease payment on a new vehicle is generally smaller than the monthly payment would be if you were purchasing the same vehicle. A lease payment plan often requires a modest down payment and the monthly payment includes a financial rate called a "money factor" and, at times, different fees than what are associated with purchase loans. Lease plans include a limit on the number of miles you can drive and the wear and tear you can put on the vehicle while it's in your possession. As long as you haven't exceeded either of these factors at the end of a lease, you can walk away from it and pay nothing further (excess mileage fees are typically 15¢ per mile, leases can be customized up to 30,000 miles per year, but understand that this will significantly affect your monthly payment). Other options include buying the vehicle by financing the remainder of the price or turning it in to the leasing dealer and starting a new lease on a new vehicle.
Quickly recapping the mileage factor when it comes to leasing - every lease plan will include a limit on miles. The lower the limit, the lower the payment. Many customers are enamored with a low monthly payment and then quickly learn that their driving needs and habits exceed the limit placed on the mileage. Higher allowances for miles are available at an added cost, so it pays to figure out roughly how many miles you will need to drive in a year before settling on a lease plan. This is not a concern when you purchase a vehicle, so buying is often a more financially feasible solution for someone who does quite a bit of driving on a regular basis. With a lease plan, terminating early isn't always an option. You're responsible for making the payments for the duration of the lease so turning the vehicle in early still means you would owe the remaining payments plus applicable fees in most cases. There are resources available for people looking to take over existing leases and, while this may seem like an attractive option, remember that you are ultimately responsible for the payments so vetting anyone thoroughly who wants to take over your lease is a must. When you're in the process of purchasing a vehicle, however, you can trade the vehicle in or sell it at any time. The only consideration is the equity in the vehicle (the value of the vehicle vs. how much you still owe) because if you have too much negative equity, selling or trading the vehicle won't make good financial sense.
Like the name implies, GAP coverage fills a gap between the ultimate value of the vehicle and what you owe on your lease plan. GAP insurance protects the interests of the finance company, paying the difference between what your insurance company would pay and what is owed if the vehicle gets stolen or destroyed in an accident and. By the same token, GAP protects you from having to cover this difference should anything catastrophic happen. GAP coverage is rolled into your monthly lease payment so it's barely noticeable. Purchase loans almost never include GAP coverage but, if you're interested in it when buying a vehicle, ask your finance professional for more information.
Here's a handy chart so you can compare factors side-by-side.
|Sizable down payment||Money Down||Less up front money|
|Higher monthly payment||Monthly Payment||Lower monthly payment (up to 60% lower)|
|Negotiated trade-in value||Trade-in||No trade in hassle or negotiation|
|Responsible for maintenance costs after warranty expires||Warranty||Less maintenance - typically always under warranty|
|GAP protection not included - added expense to purchase||GAP Protection||GAP protection included|
|Stagnant technology based on what was in effect at time of purchase||Technology||Technology obsolescence protection|
|No loyalty incentives||Loyalty||Lease loyalty incentives|
|Eligible for all dealer incentives||Incentives||Eligible for all dealer incentives|
|Potential negative equity if you sell your car before it is paid off||Equity||No chance of negative equity|
|Not required to maintain vehicle, but since you may eventually own it, why wouldn't you?||Program Maintenance||Responsible for program maintenance per manufacturers recommendation or you may be charged excess wear and tear|
|The negotiated price of a new vehicle is the same||Vehicle Price||The negotiated price of a new vehicle is the same|
|Insurance payments are the same||Insurance||Insurance payments are the same|
If you're still not sure which is best for you, one of our friendly and knowledgeable sales professionals will be happy to talk you through each. We can discuss your budget, your driving habits, what you want out of your next new vehicle and other factors. If you already have a specific Subaru model that you've had your eye on, one of our helpful finance professionals can show you the difference between the lease and purchase plan payments to help you make your final decision.
If you live in the Pacific Northwest, Subaru of Puyallup is your best bet for everything Subaru. In fact, we're your "Stress-Free Dealership" and strive to make every visit pleasant and productive. Come see what truly world-class customer service is like and shop our extensive selection of new Subaru vehicles, our vast inventory of quality used and Subaru Certified Pre-Owned vehicles or our fully-stocked genuine Subaru parts and accessories department. If your Subaru requires maintenance or repair, the factory trained technicians in our state-of-the-art service department can take care of that as well. We offer frequently updated special offers on new Subaru vehicles, parts, and accessories as well as coupons and discounts on service and repair to help you save even more over our already competitive pricing. Give us a call with any questions or to schedule a test drive at (888) 602-6088. We're located conveniently at 720 River Rd, Puyallup, WA 98371, not far from Tacoma or Lakewood and worth the drive from Seattle, WA. We can't wait to add you to our ever-growing family of satisfied customers at Subaru of Puyallup!