What You Need To Know About Leasing VS. Financing

Leasing a new car, and buying a new car through financing are both good in different ways. If you want to own your own car and don’t have the cash to pay for it outright, then auto financing could be the best option for you. However, if you just want to drive a car for a couple years and can keep it below the allocated mileage allowance, then leasing may be a better fit; it just depends on what you want. Take a look at the benefits of financing and leasing a vehicle and decide which one is right for you.

The Benefits of Financing a New Car

  • If you can’t afford to buy a new car outright, don’t worry, most people can’t. Auto financing makes it possible to own a car while paying monthly payments back to the financing company/institution.
  • If you have a good credit score you may benefit from lower monthly interest rates, hence lower monthly payments.
  • You can still put money down for the ‘down payment’ this will reduce the amount that you need financing for and your monthly payments will be lower than they would if you were financing the whole amount.
  • When you buy a car through auto financing, once you pay it off you own the car free and clear. While you are paying it off you do not have to worry about mileage limits and any other penalties that you may have incurred if you were leasing.
  • When you lease a car, you are making payments and ending up with nothing once your lease term is up. When you are done paying off your car loan, you will have a car to show for it.

The Benefits of Leasing a New Car

  • Why would you want to spend money on something that is going to depreciate? With leasing you are only paying for the amount of time that you will be using the car. The lease price of a car is essentially made up of the difference between the initial purchase price and the residual value (the amount the car will be worth when your lease term is up).
  • Since you are only paying for the time you’ll be driving the car, your monthly payments will generally be lower than if you were going to finance.
  • Leasing a car can make it affordable to drive a car that might be out of your price range to finance. You can also drive a new car every 2 to 4 years.
  • A new car auto warranty will usually last for the entire term of the lease.

Now that you know the benefits of leasing and financing, choose the one that’s right for you!