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It's time to buy your new car. You've picked out the one you want, and you sit down to do the paperwork, then the salesperson asks you if you prefer to finance or lease… and you go silent. Perhaps you haven't thought about it, or perhaps you don't know which you prefer. Truth is, most people aren't too clear on the differences between traditional financing and leasing. In point of fact, they're simply two different methods for paying for your vehicle.

Leasing Benefits:

 
• Payments are based on the "use" of a vehicle covering the depreciation over time
  
• Monthly payments are less making cars more affordable
  
• Terms are generally shorter, so you can be in your next car sooner
  
• "Residualized" financing can be tax deductible in most business uses

Buying Benefits:

• Payments are made toward interest and principle
  
• At the end of the term, you receive the title to the vehicle
  
• You are free to alter your vehicle in any way
  
• There are no limitations to the mileage you annually put on a vehicle

Whether to lease or buy is always a personal question surrounding your driving habits and uses for your next vehicle. Either way is an excellent way to purchase a vehicle and in today's world it is almost 50/50 on the number of leases vs. the number of purchase loans.