Pros and Cons of Opting for an Auto Loan Over LeasingReviewAdviceFAQ'sCalculator

Pros and Cons of Opting for an Auto Loan Over Leasing

If you are like most, buying a vehicle is a significant investment you'll make. As such, it's ideal to think ahead before purchasing to account for everything from length of ownership to primary use. By doing so, it can help you identify the best vehicle for you as well as help you decide whether to finance or lease it.

If you are leaning towards financing your next car, it's important to weigh the pros and cons of your decision in relation to leasing. Here is a look at some of the benefits and drawbacks of financing that way it can help you decide which is the best option for you.

Pro: A Limited Amount of Payments

One of the main benefits of a car loan is you have the opportunity to finance a vehicle and once you pay it off you own it. Just as important is the fact you won't continually have to make car payments in the future, which is something you would need to do if you decided to lease vehicles repeatedly. This is an enormous benefit because you can save the money you would use for the vehicle payment and use it to pad your savings account or pay off other debts.

Pros and Cons of Opting for an Auto Loan Over Leasing

Pro: Freedom to do What You Want with Your Vehicle

Another unique benefit that comes with financing is that you have much more freedom than you would if you leased a vehicle. For one, you won't have any mileage restrictions, which is something you'll encounter with a lease. If you plan to take frequent long trips with your newer vehicle this is a factor you'll want to consider before deciding which route to take.

Con: More Maintenance Costs

The longer you own a vehicle the higher likelihood you'll have to make repairs on it especially if you drive it all the time. This is something you'll need to take into account if you plan to finance a vehicle, whereas those that lease don't have this concern, as manufacturer's warranties cover most of the problems that would arise in a short term of ownership.

Obviously, there are ways to reduce repair costs for car owners. By doing the regularly scheduled services found in your vehicle's owner's manual, it will help the vehicle run well longer, which should reduce the chances of bigger expenses arising. Additionally, you can buy an extended auto warranty. If your vehicle qualifies, these warranties can cover repairs to critical components in your automobile such as its engine or transmission.

Con: Larger Down and Monthly Payments

If you plan to finance a vehicle, the smart move would be to make a down payment equal to 20 percent of your vehicle's purchase price. For many, this is a sizeable investment. In addition, when you finance a vehicle, you'll likely make higher monthly payments than you would with a lease. Therefore, it's important to examine your budget, your long term vehicle needs and from there make a determination on which is the best course of action to take.

Last Updated:

Join the discussion

Replying to Cancel

Your comment has been submitted and is awaiting approval from one of our administrators. Thank you for your readership!


Submitting your comment...

16 Great Money Saving Tips!

Cut expenses by $500+ a month. Download our FREE eBook today.

Download Now

Have you found our content useful?


Join our newsletter to receive the latest money saving advice, reviews, and offers!

YesI want to learn how to be a smart consumer!NoI'm not concerned about wasting money

100% privacy. We will never spam you.

Where should we mail you our
money saving advice, reviews & offers?

100% privacy. We will never spam you.

Adding your email to our mailing list.

Please wait just a moment

Your email has been added!

Thank you for signing up.


Looking for the best auto loans?

We've researched and reviewed the top companies.

See Our Top 3

Advertiser Disclosure

In order for MoneySavingPro to remain a consumer free service, many of the companies covered in our industry reviews compensate MoneySavingPro for new sign ups.

However, the results of our comparison tools, the rankings of the providers and the information presented is not affected by compensation. Indeed, many of these companies approach us for an advertising partnership after we have already written a published their reviews.

While we try to research and review as many providers as possible in the 100+ industries we cover, we have not reviewed every company available.

Our rating system is independent of compensation and reflects our true understanding of the industry and the company based on a variety of factors. The companies that receive the highest rating will always be the providers that we believe offer the best value to the consumer.