Finance vs. Lease – Which is Better for You?
A big decision when buying a car is deciding whether to Finance vs. Lease. Both of them are good options, but one can be more beneficial than the other, depending on the person.
Leasing is a good, cheap option in the short-term, because there is little to no down payment and the monthly payments are less expensive than if you got a loan. This is because in a lease, you only pay for the portion of the vehicle that you use. Another advantage is that you don’t get taxed as much. You can only pay tax on the portion of the vehicle you use, therefore paying less than someone who purchased.
A big disadvantage of leasing your car is the high termination cost. If you are unsatisfied with your vehicle and want to cancel your lease, you will be paying an extremely high amount to have the lease terminated. Another thing with leasing is you don’t own the vehicle. When your lease is up you either surrender the vehicle to the dealership or you can then finance the vehicle and make loan payments instead. Finally, leasing is a bad idea if you drive a lot. There are restrictions to the number of kilometers you can put on your car in a month, and going over that limit means that you have to pay more for every extra kilometer you drive.
Buying a car is great for someone who feels that actually owning a vehicle is important to them. While you will pay more in monthly loan payments, your insurance is usually lower than if you lease a vehicle. Finally, you will be able to drive the vehicle as much as you want, and not have to worry about any restrictions on the number of kilometers you use per month.
If you’re tight for cash when deciding whether to buy or lease, you should probably consider leasing. If actually owning a car is important to you and you drive a lot than you should consider buying a car. If you like the idea of having a new car every four years and paying less per month, you should lease. Either way, both are good options, just one customer might prefer one over the other.
Patrick Britton – Guest Blogger