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Should I Lease or Finance My New Car?

by Dave Dobson

You’ve found the right car, but how do you know if you should lease or finance? This is a question that most of us have had to ask ourselves at one point or another. This article will help you decide on whether to lease or finance your next car. While the cost of a new car is skyrocketing, the average consumer is still having a hard time making the decision between a car lease or car finance. The biggest difference, which can be confusing, is that a car lease requires a monthly payment but provides the vehicle for free. On the other hand, a car finance includes payments, but you need to provide a down payment and own the vehicle at the end of the contract.

Lease VS. Finance

Leasing is becoming more and more popular as automakers are offering more and more lease deals. The savings can be substantial. However, it also means you’ll be investing a large lump sum of cash for your next car. You will have to decide the dealership you get it from, the car, and your long-term needs.

Leasing a car protects your investment. The manufacturer will give you a new car every three years, and you can keep the old one. This way, the car’s value goes up as you drive it.  Also, it is a lot easier on your budget. You just make a monthly instalment payment that is lower than your monthly rent. Car leasing is a delicate topic, especially when something goes wrong with a car. When you lease, you have the car for the term of the lease, and you can’t sell it. The price of the car is fixed during the lease term, and you pay for it at the end of the lease period. It is an excellent option for buyers because they avoid the financial risk that comes with buying the car, which can lead to lower financing rates and a down payment in many cases.

Finance

When buying a car, you are presented with two options of how to finance your purchase. The options are:

  1. Full Payment then Title
  2. Lease then Title. Both options have benefits. If you can afford the car, then full payments, or your trade-in value, is the best route.

However, if you can’t afford the car, then a lease with monthly payments is best.

Purchasing a vehicle is an important financial decision and one that many new drivers don’t take the time to consider until after they’ve bought the vehicle. So, should you lease or finance your new car? Leasing is a less expensive alternative to financing a car, but once the car is paid off, you’ll need to pay the balance of the lease—or buy the car outright—in order to keep it.

The choices involved in deciding which car to buy can be difficult. Should you lease or finance? Leasing is definitely one way to cut costs. But if you plan to keep your car for a long time, a finance option could be a better option. The new-car market is flooded with lease and finance offers, including extended-term financial packages and consumer-friendly lease deals. If you’ve had enough of handing out credit card info for a depreciating asset, an alternative is a car loan; it’s not as bad as it sounds, either.

Since the U.S. auto industry crumbled in 2008, it’s become increasingly difficult for new customers to purchase a car. The most common way of getting a vehicle is to lease or finance the purchase. If you are new to a dealership and want something other than a used or new car, it may take you longer to save for a down payment, and you may have to pay for a lot of extras before you can drive away in your dream car. If you can’t afford to buy a car outright, finding a company that will allow you to pay for your car over time is undoubtedly a better option. It takes the pressure off your budget at the same time as it allows you to own and drive your car for the first time.

 

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