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Compare Auto Loan Rates
Compare which options fit your budget, credit score, and term length below.
- All
- 48 to 84 months
- 36 to 72 months
- 24 to 84 months
- All
- 500
- 510
- 550
- 575
- 640
Refinance Loan
Cred Score
Rate Term
APR*
- Average monthly savings of $150
- Work with personal loan concierge to compare options
- A+ BBB Rating
Used Car Loan
Cred Score
Rate Term
APR*
- Great for customers with limited/no credit
- Offers special military rates
- A+ BBB rating
Refinance Loan
Cred Score
Rate Term
APR*
- Customers save 26% monthly on average
- Fast & secure application process
- Sign and upload documents electronically
New Car Loan
Cred Score
Rate Term
APR*
- Below-average credit scores
- Great interest rates
- Smooth and easy online experience
Refinance Loan
Cred Score
Rate Term
APR*
- No application fee
- Lending platform that partners with banks
- Approval and loan terms based on many variables, including education and employment
- Leasing is relatively similar to having a long-term car rental.
- If you’ve got the money on hand, buying a car is often the better option.
- Drivers can purchase a leased vehicle at the end of their term if they choose.
Choosing whether to lease vs. buy a car can be a tough decision. Both choices come with distinct advantages for drivers, so the right option will ultimately come down to which one fits your needs, budget, and personal preference. Even with the best auto loan rates, leasing a vehicle may be better than purchasing one for certain motorists.
To help you figure out whether leasing or buying a car is the right choice, we took an in-depth look at the benefits and drawbacks of each. We’ll also mention which option is better for drivers in various situations and explain why that’s the case.
Leasing a Car: What To Know
When you choose to lease vs. buy a car, you essentially commit to a long-term rental agreement with a dealership. After signing an agreement with a leasing company, you’ll have exclusive access to the vehicle for the duration of the contract.
At the end of the lease term, you’ll get the option to purchase the vehicle. If you decide not to, the vehicle will need to be returned to the dealership that leased it to you.
How Do I Lease a Car?
Leasing a car is typically a much simpler process than buying a vehicle. Follow the steps below and you’ll gain access to your own leased car.
- Set a budget: First, find out how much car you can afford. Be realistic about your budget and make sure to include room for additional costs like the lease acquisition fee, security deposit, and taxes. If possible, you want to spend less than 10% of your take-home pay on the car.
- Choose your vehicle: Once you know your budget, you can start looking at vehicles. The easiest way to find the right car is by searching online. While you can lease either a new or a used car, most dealerships only offer certified pre-owned (CPO) vehicles that are four or less years old and have fewer than 48,000 miles on the odometer.
- Visit the dealership: After you narrow your search, visit the dealership and take the vehicle out for a test drive before leasing it.
- Negotiate your lease: You can negotiate a lease agreement in much the same way as you would with a purchase agreement. This could include your monthly payment, the amount you have to pay at signing, or the elimination of potential early termination fees. Be patient and firm if you want to get a better deal.
- Sign your lease: Once you reach an agreement, it’s time to sign your lease and drive your new car off the lot. Most lease agreements have stipulations about the condition in which you return the vehicle, so take good care of it while it’s yours.
Advantages of Leasing a Car
There are a few advantages that come with leasing a car. These include the following:
- Lower upfront costs: How much you need to pay at the signing of your lease contract varies, but it’s likely less than what you’d put down to buy a car. Leases also come with lower sales taxes than purchases in almost every state, and it’s relatively common for drivers to find auto lease deals.
- Lower monthly payments: Monthly lease payments tend to be lower than those for loans, though this depends on how much you put down or trade in upon purchase.
- Covered repairs: Since most leased cars are relatively new, they often fall under the manufacturer’s warranty. That means that, for the most part, repairs to your vehicle will be covered under warranty during your time of ownership.
Disadvantages of Leasing a Car
There are various downsides you’ll run into when you lease a car. The cons of leasing include factors such as:
- Vehicle condition requirements: Lease agreements tend to include requirements about the condition in which you return the vehicle. These typically include both the interior and exterior of the car, so you’ll have to pay extra for excessive wear and tear.
- No opportunity to build equity: Buying a car allows you to build equity in the vehicle over time. When you lease a car, that’s not the case. None of the money you put toward a lease will come back to you in the form of equity.
- Mileage limits: Most agreements stipulate the number of miles you can put on the car as part of your lease term. Exceeding that mileage limit, which is usually set at around 12,000 miles per year, will generally come with penalties.
Buying a Car: What To Know
When you buy a car, you sign an agreement to take over the title to it. If you pay for a car in full, you’ll get the title immediately. When you take out a loan to finance your purchase, you won’t receive the car’s title until you completely pay it off. On the other hand, you’ll never receive the title if you choose to lease vs. buy a car.
How To Buy a Car
Buying a car is a little more complicated than leasing one, but it’s still relatively straightforward. These are the general steps you’ll need to take to make a vehicle purchase:
- Assess your financial situation: If you don’t have enough cash on hand to buy a car outright, you’ll need an auto loan. Those who can afford to purchase a vehicle need to figure out a realistic idea of their budget. Follow the same 10% rule as you would for leasing and consider using a car loan calculator to reveal what you can afford.
- Get prequalified or preapproved: If you need a loan, getting prequalified or preapproved with a bank or credit union can make the car buying process more efficient. Prequalification uses a soft credit check and is an estimate of what you can afford. Preapproval is an actual agreement from a lender to finance your purchase up to a certain amount, and it comes after a hard credit check.
- Shop for a vehicle: Knowing what your budget is, you can now shop for vehicles. Searching online allows you to see what options are available not just in your area, but across the country. Remember that cars cost more than the sticker price, so leave room in your budget for taxes and fees.
- See the car in person: Whether at a dealership or through a private seller, you’ll want to test drive a vehicle before agreeing to buy it. It’s also a good idea to take it to an independent mechanic for inspection if you can.
- Negotiate your sale: Car prices and other parts of the agreement are always negotiable. You can request adjustments to the purchase price, your financing terms, add-ons, and more. Patience and resolve are your keys to getting a better deal.
- Sign off on your vehicle purchase: Once you’ve reached an agreement with the seller, it’s time to sign off on the purchase. Your lender may require you to purchase specific car insurance types, such as gap and comprehensive coverage. If this is the case, do your research to find the best car insurance for you.
Advantages of Buying a Car
Choosing to purchase a car rather than leasing one has distinct advantages. These include:
- Building equity: At least part of what you pay toward your loan every month goes toward the principal of your loan. This becomes equity that gets invested in the vehicle. Once you have more equity than debt on the car, it becomes a financial asset.
- Fewer restrictions: Aside from some requirements set by your lender, you’re mostly free to do what you want with your vehicle as a car owner. That means you won’t have to worry about scrapes on the outside or spills on the inside costing you money at the end of a lease term.
Disadvantages of Buying a Car
There are some downsides that come when you buy vs. lease a car, including:
- Value depreciation: Your car loses resale value as soon as you buy it and will continue to do so over time. That means that even as you build some equity, much of the money you invest into your purchase will disappear through depreciation.
- Risk of going upside down: When you owe more on your vehicle than it’s worth, you’ll find yourself upside down on an auto loan. The situation is terrible in the eyes of creditors and puts you at risk of paying for a car you don’t have if a total loss occurs and you lack gap insurance.
- Repair costs: After your factory warranty expires, you are responsible for repair needs on your vehicle when you own it. You can purchase an extended car warranty if you want a simple monthly cost to manage these potential needs.
Lease vs. Buy a Car: Which Is Best for You?
Leasing a car may be a better option for some people while buying one could suit others better. In the end, which choice is right for you depends on your situation and personal preferences.
When To Lease vs. Buy a Car
There are a few situations in which leasing a car might make more sense for you than purchasing one. You may want to consider becoming a lessee if:
- You don’t have money for a large down payment: You can buy a car without a big upfront payment, but doing so can leave you in a risky financial position. If you don’t have a lot of cash on hand for a down payment, an auto lease may be more secure.
- You prefer driving new vehicles: Some people simply prefer new cars with the latest technology. If this describes you, leases are a good way to get a new car every few years without the hassle of borrowing and buying.
- You want an easy claims experience: As most leased vehicles are still under their factory warranty, you won’t have to worry about paying for repairs should you need them. This provides some peace of mind that many people find valuable.
When To Buy a Car vs. Lease a Car
Buying a car is the better overall option for many people. It’s a great idea to consider purchasing your next vehicle if the following apply:
- You can make a big down payment: Putting a big chunk of money down, either in cash or in trade-in value, can give you lower monthly loan payments and a smaller chance of going upside down on your loan. If you have cash on hand or another vehicle you can put down as a trade-in, buying a car could make more sense.
- You don’t want to worry about restrictions: Leasing a car comes with restrictions on your mileage and the condition of your vehicle. If that seems like a lot to worry about, buying a car takes those factors out of the picture.
- You want to build equity: While much of your monthly car payment will go toward interest, especially early on in the loan term, you’ll still be building equity over time if you buy a car. Eventually, your vehicle will become an asset that has a positive impact on your overall financial situation.
Lease vs. Buy a Car: Conclusion
The decision of whether to lease vs. buy a car is very much an individual one. Take the time to get an accurate picture of your financial situation as well as your personal preferences and monetary goals. Whichever direction you go, be realistic about your budget and stay within it to maintain good financial health.
Recommended Lenders To Buy a Car
If you’ve weighed your options on leasing vs. buying a car and decide that purchasing one is right for you, finding a good lender could be the next step.
We recommend shopping around for lenders to see which ones offer the best loan rates and terms. Your credit won’t take any additional hits from getting multiple auto loan quotes in the short term, so there’s little downside to doing so.
Compare Auto Loan Rates
Compare which options fit your budget, credit score, and term length below.
- All
- 48 to 84 months
- 36 to 72 months
- 24 to 84 months
- All
- 500
- 510
- 550
- 575
- 640
Refinance Loan
Cred Score
Rate Term
APR*
- Average monthly savings of $150
- Work with personal loan concierge to compare options
- A+ BBB Rating
Used Car Loan
Cred Score
Rate Term
APR*
- Great for customers with limited/no credit
- Offers special military rates
- A+ BBB rating
Refinance Loan
Cred Score
Rate Term
APR*
- Customers save 26% monthly on average
- Fast & secure application process
- Sign and upload documents electronically
New Car Loan
Cred Score
Rate Term
APR*
- Below-average credit scores
- Great interest rates
- Smooth and easy online experience
Refinance Loan
Cred Score
Rate Term
APR*
- No application fee
- Lending platform that partners with banks
- Approval and loan terms based on many variables, including education and employment
myAutoloan: Best Loan Marketplace
As a lending marketplace, myAutoloan makes it easy to compare offers from multiple lenders. After you fill out your information on the site tool, you’ll start to receive personalized auto loan offers from lenders. This allows you to compare all of these offers at once, making finding the best offer simple.
Auto Credit Express: Best for Bad Credit
Having bad credit might bring you steeper interest rates and higher monthly payments, but it won’t prevent you from buying a car. Auto Credit Express specializes in bad credit auto loans and in uncovering financing options for borrowers with unique needs. The company works with a network of dealers and lenders to provide financing to most who need it, even people with recent bankruptcies and other serious financial issues.
Lease vs. Buy a Car: FAQ
Below are a few frequently asked questions about choosing whether to lease vs. buy a car.
Is it better to lease a vehicle or buy outright?
Whether it’s better to lease a vehicle or buy it outright depends on your own situation and preferences. Leasing a car is probably a better option for people who want to upgrade their vehicle often or have less money on hand to put down at signing.
Why is it better to lease a car than to buy one?
For some people, it’s better to lease a car than to buy one because it can come with less financial risk and obligation. It also allows you to avoid the hassle and expense of going through the loan and purchase process.
What are the downsides to leasing a car?
There are a few downsides to leasing a car. For example, you won’t build equity through a car lease. You’ll also have to be mindful of mileage restrictions and certain requirements on the condition you need to return the car in.
Our Methodology
Our expert review team takes satisfaction in providing accurate and unbiased information. We identified the following rating categories based on consumer survey data and conducted extensive research to formulate rankings of the best auto loan providers.
- Industry Standing: Trust and reliability are two of the most important qualities in a lender. Our team considers current industry ratings from organizations such as the Better Business Bureau (BBB) along with factors such as a company’s age.
- Availability: We examine how easy it is for borrowers to get a loan from each provider. Lenders that offer loans to meet a variety of customer needs receive high ratings.
- Loan Details: Our researchers comb through the fine print to learn about the loan amounts, term lengths, and types of loans each provider offers.
- Rates and Discounts: We take an in-depth look at the range of rates each provider offers for borrowers of different credit scores. Our team also factors in the discounts available with each lender.
- Customer Service: Our team considers customer reviews and complaints when determining this score. We also consider the ease and availability of help online, over the phone, or in person.
