Should You Lease or Purchase Your Next New Vehicle? Find Out More...

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.

The Process of Purchasing a New Subaru:

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.

The Process of Leasing a New Subaru:

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.

Mileage Concerns, Early Termination and Other Frequently Asked Questions:

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.

How GAP Coverage Affects You When You Lease:

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.

Which is Better - Buying or Leasing?

Here's a handy chart so you can compare factors side-by-side.