Finance vs. Lease Comparison: Benefits of Each Payment Option

Making the Right Choice

Understanding your options when getting a new Hyundai

When it comes to getting a new Hyundai, you have two main options: financing or leasing. Each option has its own advantages and considerations that should be weighed carefully based on your personal needs, driving habits, and financial situation.

At Gyro Hyundai, we're committed to helping you make the best decision for your lifestyle and budget. Let's explore the differences between financing and leasing to find the perfect solution for you.

When you finance a vehicle, you're purchasing it with a loan that you'll pay off over time. You'll make a down payment, then finance the rest with monthly payments that include principal and interest based on your credit score.

As you make payments, you build equity in the vehicle. Once your loan is fully paid off, you become the legal owner of the car with complete control over keeping or selling it.

With financing, the monthly payments are typically higher than lease payments, but you're building ownership with every payment.

Leasing allows you to drive a brand-new vehicle for a specific period, usually 2-3 years. You'll make an upfront payment to cover fees and taxes, then pay a monthly fee throughout the lease term.

Because lease payments tend to be lower than loan payments, you can often drive a more expensive vehicle than you could afford to finance.

At the end of the lease, you can return the vehicle and lease a new one, or purchase the leased vehicle at a predetermined residual value (though there's often less room for negotiation on the purchase price).

Financing

You own the vehicle after the loan is paid off

No mileage restrictions

Freedom to customize or modify the vehicle

Build equity over time

No wear and tear penalties

Sell or trade in whenever you want

Higher monthly payments

Higher upfront costs (down payment)

Responsible for all maintenance after warranty

Potential for negative equity if vehicle depreciates quickly

Leasing

Lower monthly payments

Drive a new vehicle every few years

Vehicle covered under warranty

Lower upfront costs

Latest safety features and technology

Tax advantages for business use

Mileage limitations (typically 10,000-15,000 miles/year)

Excess wear and tear charges possible

No equity built in the vehicle

Early termination can be expensive

When you finance, you build equity with each payment. After your loan is paid off, the vehicle is yours to keep for as long as you want or sell at any time.

Unlike leasing, financing has no mileage limits. You can drive as much as needed without worrying about excess mileage charges.

You have the freedom to customize your vehicle with aftermarket parts, accessories, or modifications without penalty.

Over time, financing becomes more economical, especially if you keep your vehicle beyond the loan term.

You can trade in or sell your vehicle whenever you want, potentially using the equity as a down payment on your next vehicle.

Lease payments are typically lower than financing payments, allowing you to drive a more expensive vehicle for less money each month.

With leasing, you can drive a new vehicle every 2-3 years with the latest technology, safety features, and designs.

Leased vehicles are typically covered by the manufacturer's warranty for the entire lease term, reducing maintenance and repair costs.

At the end of your lease, simply return the vehicle to the dealership without the hassle of selling or trading in.

You only pay tax (HST) on your monthly payments. If you decide to purchase the vehicle at the end of the lease, you'll pay the remaining tax. This allows you to get more car for a lower payment compared to financing.

Consider your monthly budget and upfront payment capabilities. Leasing typically offers lower monthly payments, but financing builds equity in the vehicle.

If you drive frequently, take long road trips, or have a long commute, financing might be better due to lease mileage restrictions. Typical lease agreements allow 10,000-15,000 miles per year.

If you enjoy having the latest model with new features every few years, leasing may be preferable. If you prefer to keep vehicles long-term, financing is generally more economical.

How much down payment do I need when leasing a car?

When leasing, you typically aren't required to make a substantial down payment. Unlike financing, where a larger down payment reduces your monthly payments significantly, making a down payment on a lease doesn't substantially lower your monthly costs.

Can I negotiate a lease payment?

Yes, lease payments are negotiable. You can also negotiate other aspects of the lease agreement, such as the interest rate and mileage allowance. Our finance team at Gyro Hyundai can help you get the best possible terms.

What happens at the end of a lease?

At the end of your lease, you have several options: return the vehicle and lease a new one, purchase the vehicle at the predetermined residual value, or simply return the vehicle and walk away. Our team will guide you through the process.

What is the maximum mileage for a lease?

Standard lease agreements typically allow between 10,000 to 15,000 miles per year. If you anticipate driving more than this, you can negotiate a higher mileage allowance at the beginning of your lease term, although this may increase your monthly payment.

Do I need car insurance for a leased car?

Yes, you must have car insurance on a leased car. Most lenders require you to have a full coverage auto insurance policy when you lease a vehicle, which typically includes liability, collision, and comprehensive coverage.

Can I use a leased car for business travel?

Yes, you can use a leased car for business travel. In fact, if the car is used primarily for business purposes, you might be able to write off the lease payments on your taxes. However, be mindful of the mileage restrictions in your lease agreement.

What are the tax benefits of leasing vs. financing?

With leasing, you only pay tax (HST) on your monthly payments rather than on the full vehicle price upfront. This can make your initial and monthly costs lower. For business use, lease payments can often be deducted as business expenses. With financing, you may be able to deduct the interest portion of your payments and depreciation. We recommend consulting with a tax professional for advice specific to your situation.

Our finance experts at Gyro Hyundai are ready to help you choose the right option for your needs.

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