Planning to buy a new car but are confused about whether to finance or lease the vehicle. Your decision can have a huge impact on your finances, and hence it is important to understand both the choices so that you make an informed decision according to your needs. Each option has its own set of pros and cons, and it is essential to consider what you want from the car before making any solid decision.
Here we have made a general observation of all the factors, which will help you know what’s best for you, financing or leasing:
Financing is when you opt to pay for your car in installments over a period of time. In most cases, the overall cost of the car increases after all the payments are made. This method of buying a car is beneficial for those who prefer to own their car and are not looking to make changes in the near future.
Through financing, the owner has the freedom to customize their car. This option is particularly ideal for those looking to buy and own a car and plan to keep it for a long time. The monthly payments would be higher than in leasing, but once you pay off the installments, you’ll be the owner of the car. Some car owners tend to have an emotional attachment towards their vehicle, and for such people, financing is the best option.
The process of leasing a car is paying a rental fee as long as you are planning to use it. A typical lease period can range from 36 to 48 months after which, you can either return the car to your dealer or renew the lease. Leasing allows you to be able to drive multiple cars over a period of years without having to go through the hassle of buying and selling each time.
Moreover, the monthly payments for leasing a car are comparatively lower than financing. For those who are looking for a temporary solution to their ever-ending car troubles or don’t wish to commit to one car for a lifetime, leasing can be the way to go. Additionally, leasing also saves you from the hassle of getting loan approvals every time before buying a car.
Based on the above points, you’ll come to understand what’s best for you, financing or leasing a vehicle. Also, consider your personal requirements, as it will help you make an informed decision. Ideally, if you intend to own a car for a while, the preferred option should be financing a car as it ultimately leads to you getting full ownership of the car.