There are pros and cons to both leasing and buying a car. Leasing and buying both allow you to finance a vehicle, but that's basically where the similarities end. Whether you should lease or buy a car is ultimately up to you, but learning about their pros and cons can help you decide.

The Pros and Cons of Leasing a Car

Leasing has its pros and cons like any other form of financing a vehicle. There are many positive things about leasing a car, even when you have bad credit. However, you should know that the better your credit score, the more likely you are to find a lessor willing to work with you.

Let's look at some of the pros and cons of leasing a vehicle:


  • Leasing vs. Buying a Car Pros and ConsTypically, leasing comes with a lower monthly payment, and is generally cheaper than buying in the short term because you're only paying for the part of the car you're using. Since you give the vehicle back at lease turn-in, the unused value, called residual value, represents what it can be sold for. The residual value is estimated at the beginning of a lease, and you could walk away ahead of the game if the lessor calculates it incorrectly, but this doesn't often happen.
  • There's no down payment involved in leasing. If you use one, it's called a capitalized cost reduction (or cap cost reduction), and it doesn't save you any money in the long run like it does with traditional car financing. You can use a cap cost reduction to lower your monthly payment, but all you're doing is prepaying the lease.
  • You get to drive a brand new vehicle and are only committed for a couple of years. Lease terms are often short, the most common being either 24 or 36 months.
  • During a typical lease, the car is covered by a manufacturer-backed warranty, which represents big savings over having to pay for repairs.

This may all sound great, but there are some cons to leasing as well...


  • Leased vehicles come with mileage restrictions. Turning in a leased car over mileage can result in some major fees – as much as 25 cents for each mile over the limit. If you drive a lot, or have a long commute to work, you may want to reconsider or buy extra miles up front.
  • Fees are charged for any excessive wear and tear. What's considered "normal" wear and tear can vary.
  • If you decide leasing isn't for you halfway through your term, you're out of luck. Sure, you can turn in your vehicle early, but you're going to be charged early termination fees plus any remaining lease payments if you do.
  • Because you never own the car, you don't benefit from any of the equity. Plus, you may be faced with rising costs each time you have to lease again.
  • Even though you don't own the vehicle, the coverage requirements mean insurance premiums tend to be higher than when you finance a car.

The Pros and Cons of Buying a Car

Like leasing, buying has its good and bad points, but purchasing a vehicle is usually easier when your credit isn't the best. In fact, there are special lenders available that provide loans specifically to borrowers suffering with poor credit. One of the highlights of a bad credit car loan is that it helps you improve your credit over time.

Let's take a look at other pros and cons:


  • You have a better chance of getting approved for an auto loan with bad credit. Subprime lenders look beyond your credit score to help get you approved based on income, residence stability, and employment history.
  • Ownership is a big plus to buying a car. This means you can customize the vehicle as you see fit and drive it as much as you want, while the only person who cares about the amount of wear and tear on the car is you.
  • Because you're financing, you're still going to be required to carry full coverage insurance. This can be more expensive than the minimum coverage required by your state, but it's most likely less expensive than if you were leasing. And, hey, at least you're covered all the way.


  • When you're financing, longer-term ownership also means things like your warranty running out (if you have one). This means any necessary repairs have to be paid for out of pocket.
  • Your monthly auto loan payments are usually higher when you're financing compared to leasing, especially if you have poor credit.
  • Down payments are usually required when you're financing a vehicle with bad credit. Bad credit lenders typically require a down payment of at least $1,000, or 10 percent of the car's selling price, whichever is less.

The Bottom Line

There are pros and cons to both leasing and buying a vehicle, and, ultimately, the one that's best for you is your choice. However, if you're looking for a way to improve your credit while getting the car you need, a bad credit auto loan could be the way to go. You have a better chance of finding financing, and we can help get you off to the right start.

Here at Auto Credit Express, we work with a large network of special finance dealerships all across the country that have lenders available to help people who are struggling with credit issues.

Our process matches you with a local dealer in your area – it's free, easy, and there's never any obligation. To get your car financing journey started, simply fill out our auto loan request form today!