Leasing Vs Financing – Major Differences

Leasing  Vs Financing – Major Differences

Leasing – It basically means when a car lease lets you drive a car without paying a large amount of cash or take out a loan and you make a small down payment with subsequent monthly payments for the term of the lease. And you will have to return the car after the term expires.

Financing – Auto financing means to buy a car with any arrangements other than paying the actual lump-sum amount of car. We do not have to return the car like in leasing.

Major differences between Leasing and Financing

The differences between Leasing and Financing a vehicle mainly include the different distribution of obligations and responsibilities one has to bear. Some of the differences has been listed below.

Possession rights of the car

Leasing – You don’t get the complete ownership of the car; you pay to use it for the term and then either return it or you buy it.

Financing – You get the complete ownership of the vehicle and get to keep it. You can keep it for however long you want and can make any modifications you please.

Down Payments

Leasing – Generally, in this you have to pay the first month’s payment, a refundable security deposit, down payment, taxes and some other possible fees.

Financing – Generally, this include the down payment or a cash price depending upon the buyer, taxes, registration fees  and possibly some other fees.

Early Termination

Leasing – This won’t be a smart decision as if you decide on early termination, you’ll have to pay early termination fees which is almost as much as the rest of the lease’s term money.

Financing – Here, you don’t have to worry about any early termination or anything. You can sell your vehicle whenever you desire and can use that money to pay off the loan.

Vehicle Return

Leasing – It is completely upto you. You can decide to return the vehicle at the end of lease’s term and if you want to buy you can do that too.

Financing – The car belongs to you and you only. You are responsible for selling or trading the car whenever you want.

Wear and Tear

Leasing – You will have to take the complete responsibility of any kind of wear and tear and if the car undergoes excessive damage, most leases will hold you responsible to pay for the damage

Financing – You are the legal owner of the car so you will have to hold yourself responsible and the only problem will be how it’ll affect the resale value.


Leasing or Financing totally depends upon the requirements of the buyer. If you don’t like to use the same car over and over again and want to enjoy new models or different types of cars, then leasing can be beneficial for you more than financing. And if you want to just buy a car and use it till it breathes its last breathe, then it’s totally up to you. Just be careful with the leasing terms and conditions and you’ll be good to go and if you are financing a car then taking a loan, you will just have to worry about paying off the loan timely.   For more clarification and information regarding the obligations while leasing and financing, contact your nearest dealer.