HOW A LEASE WORKS
On this page, you will find a simplified explanation of how a lease works. At Young Mazda Utah, our goal is to help you make the most informed decision possible. Our Product Experts can answer any questions that might you have and will show you every option that is available to you. We want to help you drive away in the right Mazda that suits both your lifestyle and your budget.
Leasing vs. Buying
When you buy a new vehicle, you pay the the entire price of the vehicle using cash, a car loan, the proceeds of a trade-in, or a combination of all 3. When you lease a new vehicle, you only pay for the difference between the vehicle's price and its expected value at the end of the lease term.
Say you find the perfect vehicle with a $30,000 price tag, and it's expected to be worth $20,000 after 3 years. If you lease it, you just pay the $10,000 in expected depreciation, plus interest and fees. If you purchase it, you pay the full $30,000, plus interest and fees.
At the end of the lease term, you return the vehicle to Young Mazda Utah. You will then have the option to purchase the vehicle outright, trade it in and buy or lease a new vehicle from the dealership, or just walk away.
Why is Leasing Usually Less Expensive?
Leasing a vehicle usually has a lower payment. Because you're only paying for the vehicle's depreciation while you have the vehicle, your monthly payments are typically lower than they would be if you purchased the vehicle. Below is an example scenario of how leasing and purchasing a vehicle differ.
Let's look at an example scenario using a 2024 model year vehicle to help illustrate. For simplicity, we'll say that you chose a new vehicle with a $30,000 price, and you're going to make a $3,000 down payment whether you purchase or lease the vehicle.
If you decide to purchase and get financing for 5 years with a 5% interest rate on a loan from a bank, credit union, or other financial institution, the monthly payment for this vehicle will be $510.
Now let's say you choose to lease instead, and the dealership is offering a 3-year lease term. For this example scenario, we will assume that your vehicle will be valued at $17,000 after the 3-year lease term ends and that you're getting an interest rate on the lease that is equivalent to 5%.
The difference between the chosen vehicle with a price of $30,000 and the vehicle's residual value of $17,000 is $13,000. You'll pay your $3,000 up front, keeping in mind that generally your first month's lease payment is included in the amount you pay upfront. That means the remaining $10,000 gets divided into 35 equal payments - 3 years minus 1 month. Your lease payments will be about $308 per month, plus some fees.
In this example scenario, your monthly payments when you lease will be about $200 per month less than when you buy. Also keep in mind that you may be required by your state to pay sales tax. In Utah, you will pay sales tax on the $13,000 depreciation when leasing. When purchasing the vehicle, you will be required to pay sales tax on the full $30,000. The way that sales tax is assessed can vary from state to state. Please be sure to ask your Young Mazda Utah leasing expert about this.
