ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

Leasing vs Buying a Car On Loan

Updated on January 28, 2015
My dad's car
My dad's car

Getting into our own dream car for the first time is an experience in itself. The kind of satisfaction you get once you own a car is something really divine. Today there are various options available that can help you get your dream. You can either choose to go for a car loan and buy a car, or opt for leasing one – according to your demands. However, each of these options has its own merits and demerits.

According to a study, a car loan is the most common debt amongst most of the people, after mortgage and student loan. If you are planning to buy a car on loan, it is really important to get a pre-approval for your car loan, before you even choose the car you want to get. Below are certain tips that can help you in ideally choosing and proceeding ahead in your car loan:

1) Check your options properly and figure out what exactly suits you the best in a car. Is it the advanced safety features, or mileage or repair costs?

2) Once your car is decided, check for the prices at various places. You can check various websites to know the prices. Check out various points that can help you decide the best possible option here.

3) Next, apply for a conventional loan at your local bank or credit union.

4) Once you’ve got a pre-approval for your loan, you can easily go ahead with the amount and won’t get confused with all the bargaining as you know the exact price of your car. This is the most efficient way as you don’t have to check the cars in showroom you can’t afford.

Usually a vehicle loan may run between 12 and 60 months, but most of the financial advisors suggest a car loan of maximum 36 months or three years for various reasons.

1) The foremost reason is the higher amount of return payment because of more interest, if you choose to go for longer term in your car loan. For instance, if you buy a car priced at $17000, with a down payment of $2000 on a 36 month loan, you will have monthly payment of $490. Then by the time your loan term ends, your call will cost you $19,640 along with the interest, i.e. around $2640 more than the actual cost of the car.

2) If God forbid, your car gets damaged by some unfortunate incident, your insurance settlement gets done on the actual cost of the car and not on its market value. So, as your car gets older while longer loan term period, you will get quite less amount from insurance agencies for any possible damage.

If you are a first time vehicle purchaser then your best step is to look at the options and calculate whether you’d be able to finish your car loan payments in 36 months or not. If yes, then go ahead get the car, otherwise it is advisable to wisely choose a less expensive car.

Now, let us look at another picture. Imagine yourself standing in the auto showroom and as you are visualizing yourself driving your dream car, feeling excited about it – you hear the salesperson announcing the amazing lease rates on the car, which are even less expensive than the monthly loan payments. What do you think? Should you take the deal or not? Well, not before knowing all the aspects of everything.

Below are certain pros and cons of owning a car versus getting one on lease:

Car leasing vs buying
Car leasing vs buying

Apart from above factors, always check the various financial programs your dealer offer you, as such offers may have hidden additional charges.

I suggest you to check both the options properly and see what suits you the best. You can choose to buy a car on loan, if you say yes to following checkpoints:

- Is this your dream car, and are you sure you are not planning to buy another car in future?

- Are you planning to settle in the present country and don't have any plans of settling abroad?

- Do you want this particular car for long term and not for some specific short term purposes?

If your answer is "No" for any of the above options, then it is advisable to opt for a car on lease. It is always advisable to have proper discussions with your financial advisor, before choosing any of the options mentioned above. You don't want to spend your nights worrying about getting out of debt and you also don't want to feel empty handed after spending so much on lease. So, look at all the pros and cons of leasing and buying a car and choose wisely.


    0 of 8192 characters used
    Post Comment

    • AllSuretyBonds profile image


      7 years ago

      Great Hub. I took the option to lease a car and it was great. Once the lease was up, I turned it back in and didn't have to pay anything. I agree that car loans are by far one of the biggest causes of debt.

    • profile image


      8 years ago

      Buying will be the best option to choose from, for a life time use and for more convenient way of dealing on payment, i think buying a car is more better-off, because your paying for it for you to own it.

    • calicoaster profile imageAUTHOR


      8 years ago

      Thanks Alpaca Annie!! :)

    • Alpaca Annie profile image

      Alpaca Annie 

      8 years ago from Indianapolis, IN

      Thanks for the information! Great hub! My husband and I were recently talking about this and your info was very helpful!

    • calicoaster profile imageAUTHOR


      8 years ago

      Thanks Barryrutherford. I felt that making a comparison table could be the most appropriate way to help people easily check the options. I've tried to cover all possible factors one must consider while deciding on whether to opt for buying a car or getting one on lease!!..I hope it helps!! :)

    • barryrutherford profile image

      Barry Rutherford 

      8 years ago from Queensland Australia

      Hi Calicoaster

      Interesting how we have all given the pitfalls in financeinga motor vehicle as well as the general high risk of owning one. Great comparisons you have made on leasing & general auto loans

    • calicoaster profile imageAUTHOR


      8 years ago

      ha ha..thanks petertheknight!!! :) ..Let me check your hub now...for when not to go for car loans!!

    • petertheknight profile image


      8 years ago from Atlanta, GA

      I think that you bring up some good points here. Good job. However, for hub I did for this topic was why you should avoid car loans. lol Anyhow, you did some really good research! (Where is the "jealous" button when you need it? hehe)

      Good work!

    • calicoaster profile imageAUTHOR


      8 years ago

      Thank you onceuponatime66 :)

    • onceuponatime66 profile image

      Jackie Paulson 

      8 years ago from USA IL

      Yes "calicoaster" I agree that to lease would be ok if one lived in an area for a few years and moved forward. Some people just get sick of colors and the cars they drive and want to change them. When the economy was good, I see that being the way to go for them. Good point.

    • calicoaster profile imageAUTHOR


      8 years ago

      You are right onceuponatime66! Leasing invites a lot because of the less overheads it has, but at the end, you simply feel like you've spent so much for nothing.

      However, it sometimes becomes useful to people who travel a lot, tend to spend just 2-3 years at one place and plan to have different future car going forward. I feel, in that case getting a car on lease can be helpful to much extent!..Also it is advisable to go for cheaper cars while leasing! :)

    • onceuponatime66 profile image

      Jackie Paulson 

      8 years ago from USA IL

      I am sorry but I would never 'lease" a car. That is because I would never own it. I have always bought my own cars. I just cannot fathom not owning my car. Back when the economy was good, big corporate america would give CEO's and Big "wiggs" vehicals or company cars. Yes, then I can see leasing, but that is about it.


    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at:

    Show Details
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the or domains, for performance and efficiency reasons. (Privacy Policy)
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)