Financing a car can be a confusing prospect. Not only do you need to know your credit score, the current market conditions and the amount of money that you intend to use as a down payment, you must also know if you intend to lease or buy the vehicle. Both are methods of financing, but they have very large differences. Neither method is perfect for everyone, though they both offer benefits. Let’s take a deeper look at the subject.
Leasing – Leasing a car is an appealing prospect for many consumers. You are able to drive newer vehicles, usually enjoy lower payments and change cars more frequently. However, leasing is not for everyone. Some consumers should not choose this option.
Pros – The pros of leasing your next vehicle are quite considerable. If you enjoy driving a new vehicle on a regular basis, this may be the option for you. If you enjoy switching vehicles every couple of years, this is definitely the choice for you.
Cons – While there are certainly pros to the situation, there are some cons, as well. For instance, if you go over the specified mileage, there is usually a fee that you must pay. In addition, any damages to be repaired or other maintenance needed at the end of the lease must be paid for by you prior to the the lease being terminated. Leasing a car is actually more expensive than purchasing a car, in the end. On top of this, you will never own the vehicle.
Purchasing – Financing a car for purchase is much different from leasing. This is the beginning of a long-term relationship. Most leases are only for a couple of years; you may be paying for your new car for five or six years. However, financing does have its upside.
Pros – You will own the vehicle when the loan is over. Your loan payments, while more expensive than a lease, will end. Lease payments go on as long as you continue to lease cars. The cost of maintenance is often better in the beginning and you can put as many miles on the car as you care to.
Cons – The cons of purchasing your car straight out are obvious. It is more expensive in the beginning. In addition, purchasing a car is a long-term relationship. This means that you will not be able to trade out of the car in only a couple of years. Finally, you will find that your maintenance is more expensive, the longer you own your vehicle.
Therefore, the decision to purchase or lease a vehicle should be made on the abovementioned merits. Making the right choice will give you a great car, the best experience and more. However, the wrong choice can find you locked into an automobile that you don’t want, or spending more money over time because you don’t own the vehicle that you are driving. Both methods should be considered carefully before choosing to follow either financing path.