A lot of people here in Memphis, TN have car financing questions, and here at Jim Keras Subaru, our team does all it can to answer them for you, especially when you're looking to buy or lease a new or used vehicle from us. One frequent question is what's the difference between a lease and an auto loan? Well, we're here to explain!
A lease is a way of getting a new or used Subaru vehicle from us, by only paying a portion of the vehicle's actual cost over a set amount of time. If you sign a 36-month lease agreement with a monthly payment, that is what you pay, and when the lease is over, you have paid that, and you have the option to keep paying to own the vehicle at its residual value, or enter another lease agreement with another vehicle.
A car loan is when you borrow money from a lender, be it us at the dealership, or a financial institution to pay for the full purchase of a new or used car. You pay back this loan over time, and the amount you borrow is called the loan principal. Loans almost always include interest on the payments, as well.
Essentially, a lease is when you pay a monthly payment toward a vehicle for a set amount of time, and a car loan is a sum of money you borrow to pay for the ownership of a vehicle, and pay it back as you go along.
We're hoping that clears it up for many folks here in Memphis, TN. If you want to learn more about all your Subaru lease and car loan options, feel free to contact us and we'd be happy to discuss them as they relate to new Subaru vehicles, and used cars in our showroom.