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I want to switch from a finance to a lease, what are the pros and cons

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I want to switch from a finance to a lease, what are the pros and cons

I currently have a 2014 Hyundai sonata which is financed and i want to trade my car in for a lease.

what should i be aware of if i choose to make this decision?

12 REPLIES
Established Contributor

Re: I want to switch from a finance to a lease, what are the pros and cons

The most important starting point is how much you financed vs. the actual value of the car currently. Financed vehicles are almost always upside-down for the first 12-18 months and then usually find a break-even point (depending on the interest rate and term).

 

Once we have this information, we can help you a little more. That being said, a lease is only a good idea for a select group of people: low mileage, low wear and tear, and high credit individuals. Even then, I only recommend leases for people (like myself) that like switching cars every few years. 


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Established Contributor

Re: I want to switch from a finance to a lease, what are the pros and cons

Pros of finance: You own the car after you're done with the payments. Its cheaper if you are in the drive my car until the wheels fall off club.

Cons of finance: You're "stuck" with this car for 10+ years or however long your vehicle lasts. This can also be a pro (if your car is lasting a long time its saving you money), unless repairs are costly.

 

 

Pros of lease: You can get a new car every 2-3 years. Not worry about expensive maintenance.

Cons of lease: Its essentially a less expensive long term car rental with mile restrictions. More expensive than finance unless you really plan on not keeping your car for a long time.

 

Community Leader
Super Contributor

Re: I want to switch from a finance to a lease, what are the pros and cons


boobie23 wrote:

I currently have a 2014 Hyundai sonata which is financed and i want to trade my car in for a lease.

what should i be aware of if i choose to make this decision?


First, see how much you can get for your car incase you still owe a lot.  I'd get quotes from CARMAX and other places to see how much you can get.  Also, educate yourself properly before leasing.

 

Your first step if you haven't done so is go to www.leaseguide.com.   A wealth of info. there to get you started to see if that option is best for you.  Leasing works well for some people and it doesn't for others.

 

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Contributor

Re: I want to switch from a finance to a lease, what are the pros and cons

Sorry OP, don't mean to jack your thread but had a question relating to this. Say I want to trade in my car every ~5 years or so, would financing still be the better option? 2-3 years seems a little soon and I don't like the miles limitations.

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Super Contributor

Re: I want to switch from a finance to a lease, what are the pros and cons


b1gr3dmachin3 wrote:

Sorry OP, don't mean to jack your thread but had a question relating to this. Say I want to trade in my car every ~5 years or so, would financing still be the better option? 2-3 years seems a little soon and I don't like the miles limitations.


To answer your question, YES- financing will be better for your situation based on what you posted.

Contributor

Re: I want to switch from a finance to a lease, what are the pros and cons


Yes-Its-Me wrote:

b1gr3dmachin3 wrote:

Sorry OP, don't mean to jack your thread but had a question relating to this. Say I want to trade in my car every ~5 years or so, would financing still be the better option? 2-3 years seems a little soon and I don't like the miles limitations.


To answer your question, YES- financing will be better for your situation based on what you posted.


Okay, that's what I was thinking but just wanted to make sure. Thank you Smiley Happy

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Regular Contributor

Re: I want to switch from a finance to a lease, what are the pros and cons


b1gr3dmachin3 wrote:

Yes-Its-Me wrote:

b1gr3dmachin3 wrote:

Sorry OP, don't mean to jack your thread but had a question relating to this. Say I want to trade in my car every ~5 years or so, would financing still be the better option? 2-3 years seems a little soon and I don't like the miles limitations.


To answer your question, YES- financing will be better for your situation based on what you posted.


Okay, that's what I was thinking but just wanted to make sure. Thank you Smiley Happy


You may want to look into balloon-financing since the payments are comparable to lease payments, but without the mileage limitations.  Obviously, you have a BIG payment at the end should you not sell/trade the vehicle before the final due-note.

Community Leader
Super Contributor

Re: I want to switch from a finance to a lease, what are the pros and cons


b1gr3dmachin3 wrote:

Yes-Its-Me wrote:

b1gr3dmachin3 wrote:

Sorry OP, don't mean to jack your thread but had a question relating to this. Say I want to trade in my car every ~5 years or so, would financing still be the better option? 2-3 years seems a little soon and I don't like the miles limitations.


To answer your question, YES- financing will be better for your situation based on what you posted.


Okay, that's what I was thinking but just wanted to make sure. Thank you Smiley Happy


You are welcome!!

Contributor

Re: I want to switch from a finance to a lease, what are the pros and cons

I was a service guy, not in the financial end so those who are more in the know please correct me if I'm wrong. I was under the impression that other lenders, say a mortgage lender, look at a leased car as more of a liability than a financed car. I was told that it's a negative asset where a financed car, depending on amount owed of course, is a positive asset in a sense, if you have equity in it.

 

From a service perspective, I leased once and will never do it again. I tend to keep my cars forever lol. And having been a service advisor for VW,Audi,Land Rover and Benz, I wouldn't want to own one once the warranty is up, short of an 82-85 Mercedes diesel (owned two 1983's and would buy another right now in a heartbeat). Nor would I ever purchase an "off lease" one as they most likely weren't maintained worth a damn.

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