Lease vs Finance
Should you buy a new VW or get a VW lease?
Find out the best option for you at Stohlman VW in Tysons.
Monthly payments are usually lower when you lease a VW. Why? When you lease a VW, you only pay for the VW depreciation, not the full purchase amount of the car. Keep in mind that other payment components are associated with leasing. These components include rental charges, sales tax, use tax and other related fees.
Monthly payments are higher when you buy/finance a VW because you are paying for the entire purchase of the vehicle plus taxes, fees, etc. However; at the end of the loan term, you will own your VW.
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When your lease term is up, you can return your VW or “walk away” from your lease. The latter option does involve some end-of-lease costs. After the end of the lease, your next steps are up to you. You can lease another VW or buy.
When you are finished paying off your VW, you OWN it! The next step is up to you. You can sell your VW or keep your VW for as long as you want!
At the beginning of a lease you may pay cap cost reduction, government or lessor charges, insurance, first monthly payment, security deposit, any prior lease or credit balance.
At the beginning of a loan term you may pay the full vehicle price or a down payment. You will have to pay sales tax or other state taxes, government or lender charges, insurance, first monthly payment, a security deposit, prior vehicle loan balances, or a prior credit balance.
The total cost of leasing a vehicle is generally lower than financing. This is due to lease savings on depreciation and gap coverage. However; it is harder to build equity when you lease.
The total costs for financing a vehicle are generally more than leasing. However; at the end of the loan term you own your vehicle.
GAP coverage is usually included in lease agreements. If it is not, you can usually purchase it.
GAP Coverage is an option available that helps bridge the gap between what you owe on your vehicle and its worth at the time of an accident or theft.
Who owns it?
When the lease term is up, you will have to return your lease, buy it or sell it. If you wish to purchase your VW at the end of the lease, you must do so at the end of the lease. While the VW is leased, the title will be in the lessor’s name. During the lease term, it is your job to insure, maintain and register the vehicle.
When you are done with your loan, you get to keep your VW! You’ll have full ownership after your final payment. If you pay the full price in cash, you automatically own your VW!
Lease payments are based on a set number of miles. If you exceed the set number of miles on your lease, you will have to pay charges for additional miles. If you think that you will drive a considerable amount, you may want to increase the miles on your lease. This will increase your monthly payment.
Your loan won’t restrict you on the number of miles you drive. However; the more VW miles you have, the lower the value of your VW.
What if I move?
Some lease requirements restrict you from moving out-of-state with the vehicle. If you are considering a future move, you may want to check the terms of your lease closely!
When you finance a vehicle, you aren’t usually restricted from moving around within the country, but you may be restricted from moving outside the country.
There is NOT a Federal law that requires a standard calculation and disclosure of a lease rate.
There is a Federal law that requires a standard calculation for disclosing Annual Percentage Rates (APR)
End of Lease/Loan
When your VW lease is up, you have the following options:
Return the vehicle
Trade or sell the vehicle
Purchase the vehicle
Arrange for a third party to purchase it
When you are done paying off your loan, you can trade-in your VW or you can keep it.
Wear and Tear
When you lease a vehicle, you may have to pay for wear & tear charges when you return the vehicle. Most leases also have specific maintenance requirements.
When you finance a vehicle, you won’t have to pay for wear & tear at the end of your loan term. BUT, if your vehicle has excessive wear it will lower the value of the vehicle and affect the trade-in or resale value.
For more information contact Stohlman Volkswagen or call (866) 308-5831
*This information is meant to inform customers and make general comparisons about buying and/or leasing a vehicle. It is not meant to sway a customer towards buying, or towards leasing. This chart does not reflect a specific lease or loan. The information on this page is adapted from an article on Edmunds about leasing vs. buying.