Deciding to buy a new vehicle is exciting—but figuring out how to pay for it can be just as important as choosing the make and model. Before you head to the dealership or start customizing your dream ride, it’s worth taking a closer look at your financing options. Should you buy and build equity over time, or lease and enjoy lower monthly payments with the flexibility to upgrade sooner?
Each path comes with its own set of pros and cons, and the right choice depends on your lifestyle, budget, and long-term goals. In this article, we’ll break down the key differences between buying and leasing to help you make a confident, informed decision. Ready to find out which option puts you in the driver’s seat financially? Let’s find out.
Use our free auto financial calculator to see whether buying or leasing is best for you
Buying a Car: Things to Consider
If you value long-term ownership and want the freedom to drive without worrying about mileage limits or strict maintenance requirements, buying your next vehicle might be the best route for you. Owning a car means you can customize it however you like, drive it as much as you want, and eventually enjoy the benefits of having no monthly payments once the loan is paid off.
When purchasing a car, you have a few options for payment. You can buy the vehicle outright with cash, which avoids interest and monthly payments altogether. Alternatively, many buyers choose to finance their purchase through a loan from a bank, credit union, or even directly through the dealership. These loans typically span three to six years, with fixed monthly payments until the balance is paid in full. Once the loan is complete, the car is yours—free and clear.
Buying also allows you to build equity in your vehicle, which can be helpful if you plan to sell or trade it in later. And while upfront costs and monthly payments may be higher than leasing, the long-term financial benefits often outweigh the initial expense, especially if you keep your car for many years.
Pros of Buying a Car
- Serves long-term needs
- Great for high-mileage drivers
- Modify the vehicle as you please
- Multiple finance options
- Loan can be paid off and monthly payment eliminated until next purchase
- Insurance costs can decrease as vehicle ages
Cons of Buying a Car
- Responsible for all repairs and maintenance
- Value depreciates over time and varies based on condition, mileage and other factors
- Typically takes 3-6 years to pay off
- Must wait to experience latest features introduced on newer models
Buying a Used Car
Buying a used car can be a financially smart move, especially for those looking to avoid the steep depreciation that occurs with new vehicles. Used cars typically have lower purchase prices and insurance costs, and if you buy outright, you won’t have monthly payments or mileage restrictions. You also have the flexibility to sell the car whenever you choose. However, buying used comes with risks: the car may have hidden mechanical issues, a shorter remaining lifespan, and fewer modern features. Maintenance costs can be higher, and warranties may be limited or expired, leaving you responsible for repairs.
Ready to buy? Use our free financial calculator to find out what vehicle fits your budget
Leasing a Car: What to Consider
If you love the thrill of driving a brand-new vehicle every few years and want access to the latest designs, technology, and safety features, leasing might be the perfect fit for your lifestyle. Leasing allows you to enjoy a new car without the long-term commitment of ownership, making it an attractive option for those who prioritize flexibility and lower upfront costs.
When you lease a car, you're essentially entering into a contract with the dealership to use the vehicle for a set period—typically two to four years. Unlike buying, you’re not working toward ownership. Instead, you agree to return the car in good condition at the end of the lease term. Think of it as a long-term rental with some added perks, like warranty coverage and fewer maintenance worries.
Leasing often comes with lower monthly payments compared to financing a purchase, and you may not need a large down payment. However, it’s important to understand the limitations. Lease agreements usually include mileage caps, and exceeding them can result in costly fees. You’ll also need to maintain the vehicle according to the lease terms, which may be stricter than what you’d follow with a car you own.
Pros of Leasing a Car
- Brand new car
- Short-term needs
- Limited maintenance
- Under factory warranty
- Little or no down payment required
- Generally low monthly payments
- Fits easily into a monthly budget
Cons of Leasing a Car
- Leasing fees including security deposit and early termination fee
- Must follow dealership rules regarding mileage, repairs, and liabilities
- Limited customization or modifications
- Mileage limits typically at 12,000 per year
- No payoff option (always need to make a payment)
- Not all banks or credit unions provide leasing finance options
Leasing a Used Car
Leasing a used car, often referred to as a “certified pre-owned lease”, can offer lower monthly payments compared to leasing new, while still providing access to newer models with updated features. Leased used cars may also come with limited warranties and maintenance coverage. On the downside, leasing used vehicles is less common and may come with stricter credit requirements, limited availability, and higher interest rates.
Ready to take the next step?
Whether you’re leaning toward buying or considering the flexibility of leasing, understanding your options is key to making a smart financial decision. Both paths offer unique benefits depending on your lifestyle, budget, and long-term goals. The more informed you are, the more confident you’ll feel when it’s time to sign on the dotted line. If buying is the right road for you, United is here to help. We offer competitive auto loans to make your purchase easier and more affordable. Visit our auto loan page and select your state to view current rates and get started today.