To Lease or to Finance: That is the Question
When it comes to buying a new car, you have three options: purchasing it with cash, purchasing it through a loan (also known as financing) or leasing it. For most shoppers, the decision comes down to buying or leasing.
On the surface, the differences between leasing and buying a vehicle seem fairly straightforward. Leasing a car means you’ll usually have access to a new set of wheels every few years; buying it likely means that you plan to drive the same car for a much longer period of time. Leasing usually includes a warranty that covers most of your repairs; buying means accepting larger repair costs, which are inevitable as the car ages. Leasing agreements can limit your mileage and your ability to customize your ride; buying means you can put as many miles as you want on the car and customize it however you’d like. Follow along with Jen as she gets a crash course on leasing vs buying.
The decision to lease or to buy a new car will have an impact on your finances as well as your lifestyle. Understanding the differences will help you make the best decision for you.
Basics of Leasing
- You lease a car for a fixed term-- typically two to four years
- An initial deposit is often required
- You make monthly payments to continue using the vehicle
When you lease, you're paying for the value of the car you use up during your term, plus interest. What's left is known as the depreciated value of the vehicle.
Basics of Financing
- Loans terms can range from three to seven years
- An initial deposit is often required
- Your monthly payments go towards repaying the balance of the loan plus the interest
You can finance a car through the dealership or through a financial institution like us!
Learn more about leasing versus buying a vehicle by clicking the handout above.
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