Financing or Leasing: Which One is Right for You?
Financing or Leasing: Which One is Right for You?
Posted on July 7, 2020
When thinking about getting a new vehicle, there are two main questions that the buyer must answer. The first is: financing vs. leasing, which one fits my lifestyle and budget? The second is: do I buy a new car or used car?
These important questions should be answered before a buyer enters a dealership because it is very easy to be swayed into a more expensive car or a longer, more expensive loan or lease agreement than originally planned.
Financing vs. Leasing: The Cash Necessary
The first thing to consider in the finance vs lease debate is the amount of money that is needed to drive away in the car. There might be different down payment amounts needed between the two financing options, which would influence a buyer's decision if they don't have a lot of cash on hand.
Financing vs. Leasing: Ownership Length
The amount of time that a buyer is going to have a car is a big consideration when considering financing vs. leasing. If someone only plans on driving the car for two or three years, financing without a significant down payment might result in them being upside down on the loan when they go to trade it in. In that case, leasing might be a better option. On the other hand, if someone wants to drive a car for a decade or more, buying is the way to go.
Financing vs. Leasing: Usage
Leases often have kilometre restrictions, meaning that drivers have to drive under a certain number of kilometres per year or face additional costs when the leased vehicle is returned. If the car will be used as a daily driver and rack up a lot of use, buyers should think about financing instead of leasing.
Financing a Vehicle
Financing is the best option for those who drive a lot of kilometres and who want to own the vehicle for a long time to minimize costs. Financing is the best financial decision for those who want to buy a car, pay off the loan, and enjoy many more years free of car payments. There are many different auto loan financing options, including varying interest rates, loan lengths, and more.
Leasing a Vehicle
Leasing is ideal for drivers who want lower monthly payments, don't want to worry about maintenance, and want a short-term commitment. Leasing is more common on brand-new vehicles, but there are leases available on late model used vehicles as well. This is a great option if someone needs to lower the monthly payment even further. There are many different types of leases available with different loan terms, lengths, and kilometre allowances.
Getting Your Next Vehicle
The decision to finance or lease a used or new vehicle is personal, but there are favorable terms out there for both leases and loans. Before heading out to a dealership, it is important to think about how long the vehicle will be owned, how much it will be driven, and what monthly payment fits in the budget, among other things.
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