Depending on your particular needs, financing or leasing your car may be the right choice. Need the newest and most luxurious of vehicles? Consider the option of leasing. However, if you are searching for a car with a high-reliability rating and are not thrilled by luxurious cars, financing may be a better option for you. However, each has its own advantages and disadvantages.
This article lists the pros and cons of leasing and financing to help you make an informed decision.
Pros and Cons of Leasing
When you choose to lease a car, you pay to use it for a fixed period, around 36 to 48 months. You are restricted when it comes to making modifications to the vehicle and the number of miles you can drive. Multiple fees are also applicable.
Once the lease period ends, you can either return the car to the company or buy it at a predetermined amount, as mentioned in the lease contract.
Typically, lease payments are lower when compared to monthly loan payments for a new car. Some manufacturers or dealers require a down payment for leasing. The more you pay, the lesser your lease amount will be.
If you plan on returning the car immediately to the dealer, it may not make sense to put down too much cash. If you want to buy the car at the end of the rental contract, paying a higher down payment will lower the purchase cost.
Pros-
– A new car every few years
– Lower monthly payments
– No resale stress
– Worry-free maintenance
Cons-
– Lack of control
– No ownership
– Expenses like early termination fees, acquisition fees, and more
Pros and Cons of Financing
Financing a car gives you complete ownership of it. However, it comes with higher loan payments than leasing the same car. You can reduce these amounts by buying a certified pre-owned car, a used car, or a less expensive new car.
If you have enough savings to pay the total car cost in cash, it works out best for overall expenses. However, you can also choose to finance your car. Monthly loan payments are determined based on the interest rate, sale price, and the time you’ll take to repay the borrowed money.
Pros-
– No restrictions
– Total control
– Cheaper when considering long-term cost
– No special fees
Cons-
– Rapid depreciation
– Driving costs like fuel, maintenance, and insurance
– Higher cost for more expensive cars
