How do monthly payments compare for buying versus leasing?
Monthly payments on a lease are usually much lower and for a shorter term than a purchase. For example, a $30,000 car purchase with 10 percent down will incur payments of $560 to $570 per month for 60 months. The same car leased will be under $500 per month with less than half the startup cost about $1200 to $1300 for only 36 months. The car will be under warranty for the entire lease term, assuming 12,000 miles per year, taking the uncertainty of repairs out of the picture. What happens if you terminate a lease early? Manufacturer’s leases usually are 24 to 36 months because most of us get the ‘new-car bug’ in this time frame. Terminating a lease can be a challenge, since the lessee is responsible for the remainder of the payments plus the residual as a payoff, plus any penalties the lessor might want to collect. Unless the lessee is in the last 90 days of the lease, the payoff amount might be several hundred to several thousand dollars more than the trade market value of the car. The
