Financing basics · Broker Black education

Lease it or buy it?

Financing buys the whole car over time; leasing rents the car's best years. A lease payment covers the vehicle's expected depreciation plus a finance charge, which is why lease payments run lower than loan payments on the same car, and why you own nothing when a lease ends.

Side by side.

	Financing	Leasing
Monthly payment	Higher for the same car	Lower for the same car
Ownership	Yours at payoff, then no payment	Return it, buy it out, or lease again
Mileage	Unlimited	Capped (often 10,000 to 15,000 per year, overage fees apply)
Wear and tear	Your business	Excess wear charged at turn-in
Customizing	Do what you like	Must return to stock
Equity	Builds as you pay	Usually none, though a buyout below market value can create some
Best horizon	Keep cars 5+ years	Want a new car every 2 to 3 years

The fine print that surprises people.

The money factor is an interest rate in disguise. Multiply it by 2400 to see the approximate APR you are paying inside the lease.
Turn-in day has a bill: disposition fees, mileage overages, and wear charges can add up right when you thought you were done.
Lease-end buyouts got restrictive. Many manufacturers' finance arms now generally require you to buy out or trade your leased vehicle through their own brand's dealers rather than any dealership. Rules vary by lender and change; verify yours before counting on a third-party buyout.
Insurance requirements run higher on leases, and GAP-style coverage is often built into the lease itself.

Quick rule of thumb: if you drive predictable, moderate miles and always want a car under warranty, leasing can fit. If you keep cars long, drive a lot, or want to be payment-free someday, financing usually wins the math.

Quick answers.

Why is a lease payment lower than a loan payment?

You are only paying for the part of the car you use (its depreciation during the lease) plus a finance charge, not the whole vehicle.

Can I trade in a leased car like an owned car?

Sometimes. It depends on the leasing company: many captive lenders now restrict third-party dealer buyouts, so your options may be limited to that brand's dealerships. Check your lease contract and ask your Broker to verify before you shop.

Is leasing throwing money away?

Not inherently: you are paying for use, like any rental, often with lower payments and constant warranty coverage. It is only a bad deal when the mileage caps, fees, or your habits do not match the contract.

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