Financing vs. Leasing: Which is Better?
When you go to purchase a new vehicle, there are plenty of options ahead for you. One of the most important is how you’ll go about paying for your new purchase. Not everyone wants or needs to own their vehicle outright, and the option to lease a new vehicle is open to you. So what are the benefits of financing, and what are the benefits of leasing?
Southtown Chrysler has a breakdown of the two options, so you can understand the difference and confidently make that choice when the time comes.
There are three main benefits to leasing a new vehicle. The first, and probably biggest, is that you’ll have a lower monthly payment. You’ll also be able to own a new car every few years, which means you can always have the latest model on hand. That means the newest safety features and designs are yours to enjoy practically as soon as they’re available. Alternately, if you really like your current vehicle, you’ll have the option to buy it after the lease ends, rather than trade up. Finally, the way lease terms are structured, it means you’ll have a vehicle under warranty in case of emergency.
The downside is you won’t technically own your vehicle, or the equity that comes along with owning a vehicle. That means you can’t customize it, and it also means if you abuse the vehicle you may end up paying out of pocket to help cover the damages. You also won’t be able to sell it. Your only option is to return the vehicle when the lease is up—or risk cancellation fees if you want to return it early. A last note is that many leases require you to negotiate an annual distance restriction, to help keep the miles on the odometer at a reasonable limit.
If you have a fairly stable lifestyle, a tighter budget, don’t do any significantly strenuous driving, and are good at keeping your vehicle properly maintained, leasing may be the right option for you.
First and foremost, financing a vehicle means owning a vehicle. Unlike with a lease, financing allows you the freedom to customize your vehicle, and the freedom to drive it for as long and hard as you want. You’ll also eventually pay-off the vehicle. Unlike with a lease, at some point you’ll have total ownership after paying off your auto-loan. At that juncture, the remaining value of the vehicle is also yours if you want to sell—which you can do at your leisure.
The downside to financing is the overall cost. Because you’re not paying for a term, you’re paying for the entire cost of the vehicle, meaning your monthly payments will almost certainly be higher than if you leased. If you own your vehicle for many years, your warranty will also eventually expire—and this can result in unexpectedly high repair bills later in your vehicle’s life.
If you do a lot of driving, want a vehicle for long-term use, prefer to have total ownership of your vehicle, and aren’t too worried about pinching pennies, financing is likely the best option for you.
Southtown Chrysler has a team of financial experts on hand to walk you through every aspect of the buying experience, including discussing whether leasing or financing a vehicle might be your best option. Contact us today to book a free consultation.