You're shopping for a new car. You know which model you want. But how should you pay for it? Financing it with a loan may require a $600 monthly payment, whereas that very same vehicle could be leased for perhaps $350 a month. (Of course, some people will find a way to justify using that $600 a month to lease a fancier car.)
It's one of those perennial questions, and everyone seems to have an opinion. The big dangling carrot of leasing is clear: cash flow. The problem, of course, is that if you always lease, you will always have a monthly payment.
Let's break down the difference between a purchase loan and a lease to the fundamentals.
If you buy a car outright and you don't have the cash to pay for it, you take out a loan. Let's assume no down payment. If the car sells for $30,000, you'll need to take out a loan for $30,000, and you may be charged interest for borrowing that money.