Shopping for a car is exciting, and there’s a lot to consider — including whether you’re going to finance or lease the vehicle.

When deciding whether to buy or lease a car, you’ll need to consider a few main factors, including the purpose of the vehicle, the number of miles you expect to drive, and how much you want your monthly payments to be.

Here’s what you need to know about the difference between leasing and buying and how to decide which option is right for you:

Leasing a car

A car lease is a contract between you and the lessor (the company that owns the car). You make monthly payments, and in exchange, you have the right to drive the vehicle for a fixed period — usually two or three years.

Car dealerships set up most leases. When you decide to lease, you pay the dealer an upfront amount to drive it off the lot. This initial fee may cover the first month’s payment, as well as taxes and fees. From there, you’ll make monthly payments for the life of the lease.

Most lease agreements limit the number of miles you can drive the car — usually 12,000 to 15,000 miles per year. In some cases, you may be able to negotiate a higher mileage allowance for an additional fee.

Keep in mind: At the end of the lease, you may have the option to buy the car for its residual value, also known as a lease buyout. If you don’t buy the car, you’ll return it to the dealership. If you’ve exceeded your mileage allowance or put excessive wear and tear on the car, the dealership will charge additional fees.

Pros of leasing a car

Here are some benefits of leasing:

  • Smaller down payment: Leasing a car usually requires little to no down payment. On most car leases, the down payment ranges from $0 to $3,000. The average down payment on a car loan, on the other hand, is just over 11% of the car’s value, according to Edmunds data.
  • Lower monthly payments: Leasing a car tends to have lower monthly payments because you’re only paying for depreciation — the amount by which the vehicle’s value drops while you’re driving it — plus interest, taxes, and fees.
  • Manufacturer warranties: The cars available to lease are brand new and still covered by the manufacturer’s warranty, which usually lasts for three years or 36,000 miles, whichever comes first. The dealership wants you to return the car in excellent condition, so your lease agreement may also cover basic maintenance, such as oil changes.

Cons of leasing a car

Here are some drawbacks of leasing:

  • Mileage limitations: Leases typically have an annual mileage restriction — usually no more than 15,000 miles. If you go over this limit, you’ll have to pay a fee for each additional mile. Most leases charge around 15 to 20 cents per mile above the mileage allowance outlined in your contract, so exceeding that limit can be expensive.
  • Additional fees: In addition to mileage overage fees, the lessor might hit you with additional wear-and-tear costs. While some wear and tear is normal and allowable, things like large dents or scratches, a chipped windshield, or ripped upholstery can result in extra charges.
  • You don’t own the vehicle: Unless you choose a lease buyout — which is expensive and usually involves additional financing — you’ll have to continue making payments as long as you have the car. You’re essentially committing to never-ending car payments if you stay in the leasing cycle.
  • Insurance may be more expensive: When you lease a car, you have to comply with insurance requirements set by your lender or leasing company. They typically require you to carry at least the state minimums for liability insurance. They’ll also require comprehensive and collision coverage, which covers damage to the vehicle due to an accident or non-accident loss, such as theft or hail. You may also want to purchase GAP insurance, which will pay off the balance of your lease if you total the vehicle. On some leases, GAP coverage will be rolled into your monthly payments.

Check out: Auto Loans for All Credit Types

Is leasing a car right for me?

Leasing a car isn’t the right move if you plan on driving the same car for more than three years or tend to drive a lot. If that sounds like you, it’s probably less expensive to buy a car. While your monthly payments might be higher initially, you’ll eventually pay off the loan and the car will be yours to drive, payment-free, as long as you like.

Leasing can be a good option if you want to drive a new vehicle every few years without a huge upfront financial commitment. This is because your upfront costs and monthly payments will be lower, and the manufacturer’s warranty should cover the car.

You might even be able to get a more comfortable or luxurious car with a lease than you’d normally be able to afford. But keep in mind the fees, mileage restrictions, and excess wear-and-tear charges. If you drive frequently or are hard on your vehicles, leasing might not be the best way to get into a new car.

Buying a car

Buying a car with a loan is pretty straightforward. You’ll borrow money from a bank, credit union, or other lender and make monthly payments for a fixed period of time.

The initial down payment and monthly payments will be higher compared to leasing the same vehicle. But the vehicle will officially be yours once you pay off the loan.

If you want to make buying a car more affordable, consider bypassing the new-car lot. You may be able to find a used or certified pre-owned vehicle that’s just a few years old for a lower price than buying new.

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Pros of buying a car

Here are some benefits of buying a car:

  • No mileage limits: You don’t have to worry about mileage limits or fees. Drive as much as you want!
  • No extra fees: Since the car will be yours, there are no extra fees when it comes to normal wear and tear. You can treat it as nicely or as poorly as you want.
  • Freedom to sell or trade in the car: When you lease a car, you’re under contract to continue making payments until the lease term ends. Getting out of a lease contract can be difficult and expensive. When you buy a car, you can choose to sell or trade in your car at any time.

Check out: How to Get a Personal Loan

Cons of buying a car

Here are some drawbacks of buying a car:

  • Larger initial down payment: You should plan on making a down payment of at least 10% of the car’s purchase price. While it’s possible to buy a car without a down payment, the finance company will usually charge a higher interest rate, which will cost you more in the long run.
  • Higher monthly payments: With a car loan, you’ll typically pay more each month compared to leasing. The average new lease payment in 2021 was $531, compared to $644 for new auto loan payments, according to Experian’s State of the Automotive Finance Market report.
  • Maintenance costs: Leased vehicles are usually covered by the manufacturer’s warranty, and the dealership may even perform free oil changes and other basic maintenance services. But when you buy a car, you’re responsible for ongoing maintenance and any major repairs outside of the manufacturer’s warranty.

Is buying a car right for me?

While buying a car is a little more expensive, it does give you more control over your situation. You don’t have to worry about mileage, the condition of your car, or being stuck leasing a car you no longer want.

If cost is your primary concern, remember that you have many options for financing a new-car purchase, including:

  • Vehicle loan from a bank or credit union: Consider getting pre-approved for a car loan with several banks and your local credit union. Then you can compare rates and find the best offer for you. Keep in mind that banks may advertise low rates on car loans, but those offers are usually reserved for borrowers with excellent credit. Credit unions typically offer lower rates than banks do, but you have to be a member to apply. Banks and credit unions may also limit your options — some won’t finance cars over a certain age or odometer reading.
  • Dealer financing: Car dealerships typically offer financing on site. The dealership may have a relationship with a bank or lending institution or have its own in-house financing company. This makes financing convenient because you can apply for and finalize your loan as soon as you decide which car you want to buy. But if you don’t do your own comparison shopping before visiting the dealership, you could wind up paying a higher interest rate than if you’d shopped around.
  • Personal loan to buy a car: You can use a personal loan to buy a car. But interest rates on personal loans tend to be higher than those offered by banks, credit unions, or in-house dealership financing companies. Still, it might make sense to use a personal loan if you’re buying an older vehicle or one from a private seller that needs work. In this case, other lenders might not be willing to provide an auto loan for the purchase, so a personal loan may be your only financing option.

The personal loan companies in the table below compete for your business through Credible. You can request rates from all of these partner lenders by filling out just one form (instead of one form for each) and without affecting your credit score.

Lender Fixed rates Loan amounts


Credible Rating



Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.






9.95% – 35.99% APR
$2,000 to $35,000**
  • Fixed APR:

    9.95% – 35.99% APR
  • Variable APR:
    N/A
  • Min. credit score:
    550
  • Loan amount:
    $2,000 to $35,000**
  • Loan terms (years):
    2, 3, 4, 5*
  • Time to fund:
    As soon as the next business day (if approved by 4:30 p.m. CT on a weekday)
  • Fees:
    Origination fee
  • Discounts:
    Autopay
  • Eligibility:
    Available in all states except CO, IA, HI, VT, NV NY, WV
  • Customer service:
    Phone, email
  • Soft credit check:
    Yes
  • Loan servicer:
    Avant
  • Loan Uses:
    Debt consolidation, emergency expense, life event, home improvement, and other purposes
  • Min. Income:
    $1,200 monthly


Credible Rating



Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.






7.29% – 17.99% APR
$10,000 to $50,000
  • Fixed APR:

    7.29% – 17.99% APR
  • Variable APR:
    N/A
  • Min. credit score:
    700
  • Loan amount:
    $10,000 to $50,000
  • Loan terms (years):
    3 to 6
  • Time to fund:
    Next business day
  • Fees:
    No prepayment penalty
  • Discounts:
    None
  • Eligibility:
    Available in all 50 states
  • Customer service:
    Phone
  • Soft credit check:
    Yes
  • Min. Income:
    Does not disclose
  • Loan Uses:
    Debt consolidation, home improvement, self-employment, and other purposes


Credible Rating



Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.






4.99% – 35.99% APR
$5,000 to $50,000
  • Fixed APR:

    4.99% – 35.99% APR
  • Variable APR:
    N/A
  • Min. credit score:
    600
  • Loan amount:
    $2,000 to $50,000
  • Loan terms (years):
    2, 3, 4, 5
  • Time to fund:
    As soon as 1 – 3 business days after successful verification
  • Fees:
    Origination fee
  • Discounts:
    None
  • Eligibility:
    Available in all states except DC, IA, VT, and WV
  • Customer service:
    Phone
  • Soft credit check:
    Yes
  • Loan servicer:
    Best Egg and Blue Ridge Bank
  • Min. Income:
    None
  • Loan Uses:
    Credit card refinancing, debt consolidation, home improvement, and other purposes


Credible Rating



Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.






5.99% – 24.99% APR
$2,500 to $35,000
  • Fixed APR:

    5.99% – 24.99% APR
  • Min. credit score:
    660
  • Loan amount:
    $2,500 to $35,000
  • Loan terms (years):
    3, 4, 5, 6, 7
  • Time to fund:
    As soon as the next business day after acceptance
  • Fees:
    Late fee
  • Discounts:
    None
  • Eligibility:
     Available in all 50 states
  • Customer service:
    Phone
  • Soft credit check:
    Yes
  • Loan Uses:
    Auto repair, credit card refinancing, debt consolidation, home remodel or repair, major purchase, medical expenses, taxes, vacation, and wedding


Credible Rating



Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.






7.99% – 29.99% APR
$7,500 to $50,000
  • Fixed APR:

    7.99% – 29.99% APR
  • Min. credit score:
    Does not disclose
  • Loan amount:
    $10,000 to $50,000
  • Loan terms (years):
    2, 3, 4, 5
  • Time to fund:
    As soon as 2 business days
  • Fees:
    Origination fee
  • Discounts:
    No
  • Eligibility:
    Available in all states except CO, CT, HI, KS, NH, NY, ND, OR, VT, WV, WI, and WY
  • Customer service:
    Phone
  • Soft credit check:
    Yes
  • Min. Income:
    None
  • Loan Uses:
    Debt consolidation, home improvement, wedding, travel, medical expenses, and other purposes


Credible Rating



Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.






5.99% – 24.99% APR
$5,000 to $40,000
  • Fixed APR:

    5.99% – 24.99% APR
  • Min. credit score:
    600
  • Loan amount:
    $5,000 to $40,000
  • Loan terms (years):
    2, 3, 4, 5
  • Time to fund:
    As soon as 2 – 5 business days after verification
  • Fees:
    Origination fee
  • Discounts:
    None
  • Eligibility:
    Available in all states except MA, NV, and OH
  • Customer service:
    Phone, email, chat
  • Soft credit check:
    Yes
  • Min. Income:
    None
  • Loan Uses:
    Debt consolidation and credit card consolidation only


Credible Rating



Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.






7.04% – 35.89% APR
$1,000 to $40,000
  • Fixed APR:

    7.04% – 35.89% APR
  • Min. credit score:
    600
  • Loan amount:
    $1,000 to $40,000
  • Loan terms (years):
    3, 5
  • Time to fund:
    Usually takes about 2 days
  • Fees:
    Origination fee
  • Discounts:
    None
  • Eligibility:
    Available in all 50 states
  • Customer service:
    Phone, email
  • Soft credit check:
    Yes
  • Loan servicer:
    LendingClub Bank
  • Min. Income:
    None
  • Loan Uses:
    Debt consolidation, paying off credit cards, home improvement, pool loans, vacations, and other purposes


Credible Rating



Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.






7.99% – 35.99% APR
$2,000 to $36,500
  • Fixed APR:

    7.99% – 35.99% APR
  • Min. credit score:
    580
  • Loan amount:
    $2,000 to $36,500
  • Loan terms (years):
    2, 3, 4
  • Time to fund:
    As soon as the next business day
  • Fees:
    Origination fee
  • Discounts:
    Autopay
  • Eligibility:
    Available in all states except NV and WV
  • Customer service:
    Phone, email
  • Soft credit check:
    Yes
  • Min. Income:
    $20,000
  • Loan Uses:
    Home improvement, consolidate debt, credit card refinancing, relocate, make a large purchase, and other purposes


Credible Rating



Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.






3.99% – 19.99% APR
$5,000 to $100,000
  • Fixed APR:

    3.99% – 19.99% APR
  • Min. credit score:
    660
  • Loan amount:
    $5,000 to $100,000
  • Loan terms (years):
    2, 3, 4, 5, 6, 7*
  • Time to fund:
    As soon as the same business day
  • Fees:
    None
  • Discounts:
    Autopay
  • Eligibility:
    Available in all states except RI and VT
  • Customer service:
    Phone, email
  • Soft credit check:
    No
  • Loan servicer:
    LightStream
  • Min. Income:
    Does not disclose
  • Loan Uses:
    Credit card refinancing, debt consolidation, home improvement, and other purposes


Credible Rating



Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.






6.99% – 19.99% APR1
$3,500 to $40,0002
  • Fixed APR:

    6.99% – 19.99% APR1
  • Min. credit score:
    660
    (TransUnion FICO®️ Score 9)
  • Loan amount:
    $3,500 to $40,0002
  • Loan terms (years):
    3, 4, 5, 6
  • Time to fund:
    Many Marcus customers receive funds in as little as three days
  • Fees:
    None
  • Discounts:
    Autopay
  • Eligibility:
    Available in all 50 states
  • Customer service:
    Phone
  • Soft credit check:
    Yes
  • Loan servicer:
    Goldman Sachs
  • Min. Income:
    $30,000
  • Loan Uses:
    Credit card refinancing, debt consolidation, home improvement, major purchase, and other purposes


Credible Rating



Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.






18.0% – 35.99% APR
$1,500 to $20,000
  • Fixed APR:

    18.0% – 35.99% APR
  • Min. credit score:
    None
  • Loan amount:
    $1,500 to $20,000
  • Loan terms (years):
    2, 3, 4, 5
  • Time to fund:
    As soon as the same day, but usually requires a visit to a branch office
  • Fees:
    Origination fee
  • Discounts:
    None
  • Eligibility:
    Must have photo I.D. issued by U.S. federal, state or local government
  • Customer service:
    Phone, email
  • Soft credit check:
    Yes
  • Min. Income:
    Does not disclose


Credible Rating



Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.






5.49% – 17.99% APR
$600 to $50,000
(depending on loan term)
  • Fixed APR:

    5.49% – 17.99% APR
  • Min. credit score:
    660
  • Loan amount:
    $600 to $50,000*
  • Loan terms (years):
    1, 2, 3, 4, 5
  • Time to fund:
    2 to 4 business days after verification
  • Fees:
    None
  • Discounts:
    None
  • Eligibility:
    Does not disclose
  • Customer service:
    Phone, email
  • Soft credit check:
    No
  • Min. Income:
    Does not disclose
  • Loan Uses:
    Debt consolidation, home improvement, transportation, medical, dental, life events


Credible Rating



Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.






7.95% – 35.99% APR
$2,000 to $40,000
  • Fixed APR:

    7.95% – 35.99% APR
  • Min. credit score:
    640
  • Loan amount:
    $2,000 to $40,000
  • Loan terms (years):
    3, 5
  • Time to fund:
    As soon as one business day
  • Fees:
    Origination fee
  • Discounts:
    None
  • Eligibility:
    Available in all states except IA, ND, WV
  • Customer service:
    Phone, email
  • Soft credit check:
    Yes
  • Min. Income:
    None
  • Loan Uses:
    Debt consolidation, home improvement, vehicles, small business, new baby expenses, and other purposes


Credible Rating



Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.






6.99% – 22.28% APR10
$5,000 to $100,000
  • Fixed APR:

    6.99% – 22.28% APR10
  • Min. credit score:
    Does not disclose
  • Loan amount:
    $5,000 to $100,000
  • Loan terms (years):
    2, 3, 4, 5, 6, 7
  • Time to fund:
    3 business days
  • Fees:
    None
  • Discounts:
    Autopay
  • Eligibility:
    Available in all states except MS
  • Customer service:
    Phone, email
  • Soft credit check:
    Yes
  • Min. Income:
    Does not disclose
  • Loan Uses:
    Solely for personal, family, or household uses


Credible Rating



Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.






8.93% – 35.93% APR7
$1,000 to $20,000
  • Fixed APR:

    8.93% – 35.93% APR7
  • Min. credit score:
    560
  • Loan amount:
    $1,000 to $50,000
  • Loan terms:
    3 to 5 years 8
  • Time to fund:
    Within one day, once approved9
  • Loan types:
    Debt consolidation, pay off credit cards, home improvements, unexpected expenses, home and auto repairs, weddings, and other major purchases
  • Fees:
    Origination fee
  • Discounts:
    Autopay
  • Eligibility:
    A U.S. citizen or permanent resident; not available in DC, SC, WV
  • Customer service:
    Phone, email
  • Soft credit check:
    Yes


Credible Rating



Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.






5.94% – 35.97% APR
$1,000 to $50,000
  • Fixed APR:

    5.94% – 35.97% APR
  • Min. credit score:
    560
  • Loan amount:
    $1,000 to $50,000*
  • Loan terms (years):
    2, 3, 5, 6
  • Time to fund:
    Within a day of clearing necessary verifications
  • Fees:
    Origination fee
  • Discounts:
    Autopay
  • Eligibility:
    Available in all states except West Virginia
  • Customer service:
    Email
  • Soft credit check:
    Yes
  • Min. Income:
    Does not disclose
  • Loan Uses:
    Debt consolidation, credit card refinancing, home improvement, and other purposes


Credible Rating



Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.






4.37% – 35.99% APR4
$1,000 to $50,0005
  • Fixed APR:

    4.37% – 35.99% APR4
  • Min. credit score:
    580
  • Loan amount:
    $1,000 to $50,0005
  • Loan terms (years):
    3 to 5 years4
  • Time to fund:
    As fast as 1 business day6
  • Fees:
    Origination fee
  • Discounts:
    None
  • Eligibility:
    Available in all 50 states
  • Customer service:
    Phone, email
  • Soft credit check:
    Yes
  • Min. Income:
    $12,000
  • Loan Uses:
    Payoff credit cards, consolidate debt, take a course or bootcamp, relocate, make a large purchase, and other purposes
Compare rates from these lenders without affecting your credit score. 100% free!

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All APRs reflect autopay and loyalty discounts where available | LightStream disclosure | 10SoFi Disclosures | Read more about Rates and Terms

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