South Holland Dodge

113 W. 162nd Street
South Holland, IL 60473
Phone: 708-333-1060
Fax: 708-333-1829

Lease vs Buy

Should I worry about not having "ownership" of my vehicle?

No. More than likely there is no specific reason which requires you to own the vehicle. Leasing a vehicle does not prevent ownership--it postpones the decision until the end of the lease term. Unless you have completely paid off your current vehicle, it is the bank who owns your car--not you. Leasing insulates you from negative resale market conditions over which you have no control or influence.

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Do I drive too many miles for a leased vehicle?

No. Actually, the more miles you drive the more you should consider leasing Heavy mileage depreciates a vehicle whether you own it or lease it. Leasing allows you to put a lot of miles on the bank's car, not yours.

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How is leasing is different from buying?
  Leasing Buying
Ownership You do not own the vehicle. You get to use it but must return it at the end of the lease unless you choose to buy it You own the vehicle and get to keep it at the end of the financing term.
Up-front Costs Up-front costs may include the first month's payment, a refundable security deposit, a capitalized cost reduction (like a down payment), taxes, registration and other fees, and other charges. Up-front costs include the cash price or a down payment, taxes, registration and other fees, and other charges.
Monthly payments Monthly lease payments are usually lower than monthly loan payments because you are paying only for the vehicle's depreciation during the lease term, plus rent charges (like interest), taxes, and fees. Monthly loan payments are usually higher than monthly lease payments because you are paying for the entire purchase price of the vehicle, plus interest and other finance charges, taxes, and fees.
Early termination You are responsible for any early termination charges if you end the lease early. You are responsible for any pay-off amount if you end the loan early.
Vehicle return You may return the vehicle at lease end, pay any end-of-lease costs and "walk away." You have to sell or trade the vehicle when you decide you want a different vehicle.
Future value The lessor has the risk of the future market value of the vehicle. You have the risk of the vehicle's market value when you trade or sell it.
Mileage Most leases limit the number of miles you may drive (often 12,000 - 15,000 per year). You can negotiate a higher mileage limit and pay a higher monthly payment. You will likely have to pay charges for exceeding those limits if you return the vehicle. You may drive as many miles as you want, but higher mileage will lower the vehicle's trade-in or resale value.
Excess wear Most leases limit wear and tear to the vehicle during the lease term. You will likely have to pay extra charges for exceeding those limits if you return the vehicle. There are no limits or charges for excessive wear and tear to the vehicle, but excessive wear will lower the vehicle's trade-in or resale value.
End of term At the end of the lease (typically 2-4 years), you may have a new payment either to finance the purchase of the existing vehicle or to lease another vehicle. At the end of the loan term (typically 4-6 years), you have no further loan payments.
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What might I have to pay at the beginning of the lease?

  • Your first monthly payment
  • A refundable security deposit or your last monthly payment
  • Other fees for licenses, registration and title
  • A capitalized cost reduction (like a down payment)
  • An acquisition fee (also called a processing or assignment fee)
  • Freight or destination charges
  • State or local taxes

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What will I have to pay during the lease?

  • Your monthly payment
  • Any additional taxes not included in the payment such as sales, use and personal property taxes
  • Insurance premiums
  • Ongoing maintenance costs
  • Any fees for late payment
  • Safety and emissions inspections
  • Traffic tickets
  • If you end your lease early, you may have to pay substantial early termination charges

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If I don't buy the vehicle at the end of the lease what might I have to pay?

  • A disposition fee
  • Charges for excess miles and excess wear

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Can I compare different lease offers and negotiate some terms?

Yes. Consider…

  • The agreed-upon value of the vehicle--a lower value can reduce your monthly payment
  • Up-front payments, including the capitalized cost reduction
  • The length of the lease
  • The monthly lease payment
  • Any end-of-lease fees and charges
  • The mileage allowed and per-mile charges for excess miles
  • The option to purchase either at lease end or earlier
  • Whether you lease includes gap coverage, which protects you if the vehicle is stolen or totaled in an accident

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What are my rights when I lease a vehicle?

  • Use it for an agreed-upon number of months and miles
  • Turn it in at lease end, pay any end-of-lease fees and charges and "walk away"
  • Buy the vehicle if you have a purchase option
  • Take advantage of any warranties, recalls, or other services that apply to the vehicle

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What am I responsible for?

  • Excess mileage charges when you return the vehicle. Your lease agreement will tell you how many miles you can drive before you must pay for extra miles and how much the per-mile charge will be.
  • Excess wear and tear charges when you return the vehicle. The standards for excess wear and tear, such as body damage or worn tires, are in your lease agreement
  • Substantial payments if you end the lease early. The earlier you end the lease, the greater these charges are likely to be.

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