Leasing and Financing a Car
Auto Repair Business & Marketing

What’s the Difference Between Leasing and Financing a Car?

Cars are a large purchase for anyone, so buying one outright is not in everyone’s best interest. For many people, leasing or financing is the best option. But what exactly is the difference?

There are benefits of financing and leasing, so look at your options carefully.

If you’ve been looking to make the next move in your car buying experience, but you’re stuck on leasing vs financing, look no further. We will finally put to rest that question of “what’s the difference between leasing and financing a car?”


Financing a car has long been the traditional way of paying for a vehicle. It allows you to get a loan from a bank, dealership, or individual auto loaner to pay for your car. However, monthly rates can tend to be higher than leasing rates due to interest but you’re also you’re making a longer-term investment.

Condition & Mileage

When financing a car, you have the freedom to use your car however you want. There isn’t anyone expecting a car back or returned the way you borrowed it. The car is yours.

Say you have a Ford F-150 and two kids who have a habit of spilling juice boxes all over your seats. Going with Ford used car financing will be a better bet than leasing any day.


When looking at car buying options, how to finance a car is usually one of the first questions you’ll ask. Financing car options range from bank loans to dealership loans to auto loaners, so you can choose the loan option that works best for you. Payments, while higher than a lease, give you a greater return.

After you’ve completed all the monthly payments, you own a car! Though material, a car is something we all grow attached to. Financing allows you the opportunity to keep the car and put those payments toward the car itself.


Financing a car allows you flexibility. Not only with the condition and the mileage you put on it through the years, but it gives you more financial freedom once it’s paid off.

You can go the route of financing a used car or a new one, and invest in an asset you can even pass down.

If you plan on owning your car for years to come and paying off a car that you can call yours is the goal, then financing is the way to go. Once it’s been paid, your car is yours to trade in sell, or drive until the wheels fall off. But we recommend servicing sometime before that!


Leasing allows you to pay monthly to drive a car. Though, unlike financing, it does not leave you with a car at the end of the lease. You make payments until the lease term is up and return the car to the dealership.

Condition & Mileage

When leasing a car, you have to consider if you can handle the requirements set forth by your contract. Most leases will set terms that determine how you should return the car. These terms can include specific mileage restrictions and cosmetic and mechanical quality standards.

If you find that you drive more miles than allotted for the lease, it probably isn’t a good idea to move forward. Similarly, if you know you don’t keep your car clean or tend to rough up your vehicles a bit, you could incur charges after returning it.


A lease payment for a car is a lot like renting a house or apartment. You have strict rules to follow while you use it, you have to give it up at the end of the lease term, and if you try to break the lease early you risk substantial termination fees.

When a car is financed, you pay monthly on the loan; however, with a lease, you’re only paying for the value of depreciation after you drive it off the lot. Once you return the car, the dealer sells it used or leases it out again to another person. Leasing is usually a lower monthly payment but leads to less reward at the end of your contract.

This option may be for people who want a newer car with better features without having the higher monthly payments that financing would require.


For those who enjoy driving a new car every couple of years or like having the latest and greatest vehicle, leasing is probably the better option. It allows you to rent the car until the lease is up when you can choose another one. It could also be an attractive option if you don’t want to own a car or plan on moving after x-amount of months or years.

If you get bored with your cars or know that you tend to treat your cars really well, it may also seem like a no-brainer. Just be careful to read terms carefully. Flexibility is only as convenient as the terms you’ve agreed to.

Read the fine print and ask any questions you have to ensure you’re getting the deal you think you are. Some dealers even have terms in place that restrict the state or country you drive the car in, so keep all of these details in mind when looking at leasing options.

What’s the Difference Between Leasing and Financing a Car?

When it comes down to the nitty-gritty of asking, “What’s the difference between leasing and financing a car?”, the answer comes down to flexibility.

Your personal preferences and life choices will determine what the best decision for you is. There’s an option out there for everyone to make the most informed decision for themselves. What’s yours?

For more automotive information, check out some of our other articles or repair manuals! Find service information on a wide variety of makes and models.