When it comes to getting a new vehicle, what is the best option?
You’re finally in the market to shop for a new vehicle. You know the style, its primary use, and must-have features. Not everyone has enough cash to make a full payment on owning a new vehicle, so what’s the next best option? There are many pros and cons to leasing and financing a vehicle. It all depends on your needs.
While it might take some time, taking the financing route means that you will have eventual ownership of your vehicle. If you’re looking for a vehicle that is going to go the distance long-term, you don’t necessarily want to pay on that monthly for the foreseeable future like you would in a lease.
- Car Modifications
When leasing a car, you abide to a contract that will not allow certain modifications. If you’re wanting to upgrade or change certain aspects about the car, ownership is key.
- No Mileage Limits
Some leasing contracts have mileage limits. If you’re a frequent driver or traveler and don’t want to worry about reaching your limits, financing the car to be your own might be the best bet
- More Expense Short Term
Whether you have a down payment or are having to take on a large monthly note, the expense for purchasing can be very high short term. In addition to down payment, there’s also interest on the principal portion.
When you purchase a vehicle to own, it’s hard to tell how much the car will be worth down the line. This could be a pro in the long run, but it’s certainly a risk as well.
While leases usually cover the entirety of its contact, should you decide to finance, there is a chance that the warranty will expire before you are ready to sell.
- Lower Monthly Rates
Because you are paying for the depreciation that occurs while you are leasing, monthly payments are almost always lower than a financing option.
- Latest and Greatest
If you’re one to constantly want upgrades, leasing is by far a better option.
- Trade-in Ease
When your lease is up, all you have to do is drive to the dealership and walk away with the new vehicle. You don’t have to hassle with negotiations or what to do with your old vehicle.
- No Ownership
Leasing over financing is similar to renting a home over a mortgage payment. The leasing company owns the vehicle, and you pay to use it. If your car is stolen or something else happens to it, you’d still pay off to the leasing company the value of the car.
- Mileage Limits
Strict mileage limits can be a pain dependent upon your situation. Mileage is negotiated into the monthly rate, so it’s very possible you could end up overpaying.
- No Cash for the Next Car
Because you have nothing to sell, there’s no cash to put toward your next vehicle. There’s sometimes a zero-down lease option, but if a down payment is required you may have to dip into your bank account to come up with the cash.