The Pros and Cons of Leasing Vs. Financing a Car
When you need a new car, you have the option to either lease it or finance it. Both options come with benefits and disadvantages so you will want to spend the time determining the best option for your needs. Here’s everything you need to know about leasing and financing vehicles so you can make the choice that best fits your budget.
Leasing a Vehicle
If you choose to lease a new vehicle, you will have a more cost-efficient payment each month. Instead of retaining ownership rights to a new Nissan for sale, you can have all the benefits of driving the vehicle without the responsibilities of maintaining it. The price point may also fit better in your budget, so you can drive a nicer vehicle than you can afford to buy.
Leasing a vehicle also absolves you of the responsibility for repairs and maintenance. If you lease a new car, the lender pays for repairs and maintenance, so you do not have to budget for those expenses.
The final benefit of leasing a vehicle is that you are free to upgrade models whenever your current contract expires. Instead of having to wait until you have paid off your auto loan, you can upgrade to your dream vehicle at any time.
Unfortunately, leasing vehicles also has a few disadvantages. As you do not own the car, it is not considered an asset. Most leasing agreements only allow you to travel for a certain number of miles, and you can also incur significant fees if you aren’t careful.
Financing a Vehicle
Financing a vehicle involves securing a loan that covers the cost of the car. You make monthly payments until the entire loan has been paid off. In this situation, you retain all rights of ownership to the car and are responsible for paying for any necessary maintenance or repairs. You are locked into paying back the loan, however, so you cannot upgrade your model until you have paid off the cost of the financing.
Car payments are often a significant expansive month, and if you choose to finance your vehicle, it can take a large chunk out of your monthly budget. Additional expenses such as new tires, oil changes, and brake pad upgrades can also affect your budget.
However, because you are paying for the car, you have all the rights of ownership, and the vehicle is viewed as an asset. You have the right to trade it in or sell it at any time for any reason. You can also choose how far you want to travel in it and are not limited to the restrictions of a lease agreement. Financing a vehicle gives you more freedom over how to drive and maintain it than if you choose to lease the car.
Make the Best Choice for Your Needs
There are benefits whether you choose to lease or finance a car, so it’s important to weigh the advantages of each option and choose the one that best meets your needs. Knowing how each option can benefit your life helps you choose the right one for you.
