
Drivers who want to take home a new car have two primary options: financing or leasing. Understanding the difference between the two is important because each has pros and cons. Car leasing in Maryland offers lower monthly payments and a typically short three-year commitment to the car. Buying a car may cost more, but you get the perks of ownership.
The Basics of Leasing vs. Buying
Leasing a vehicle is similar to renting it. You make monthly payments that cover the cost of depreciation during the lease term and return it to the dealership at the end of the lease. Buying a vehicle is an outright purchase that transfers full ownership to you.
Ownership and Equity
When you finance a vehicle, you gradually build equity in it. You get closer to full ownership with each payment. Once your loan is paid off, you enjoy full equity in your vehicle.
Nearly all vehicles depreciate over time. The fastest depreciation occurs over the first five years, when a car can lose as much as 60% of its original value.
Up-Front Costs and Monthly Payments
Financing
- Average monthly payment: $667
- Down payment reduces financed amount
- Build equity over time
- Responsible for maintenance costs
Leasing
- Average monthly payment: $540
- Capitalized cost reduction up front
- No equity built
- Some maintenance may be covered
Critical Considerations for Maryland Residents
- 6% state excise tax on all leased and purchased vehicles
- Registration fees range from $110.50 to $161.50
- Sales tax may be spread over lease payments
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Whether you're leasing or buying, our team is here to help you make the right choice.