With vehicle purchases being significant investments, exploring your financial options may be your ideal move before finalizing the sale. Budgeting and considering every affordable make and model is only part of the process; once you find the car of your dreams, it’s time to view payment plans.
You’ve probably asked, “What’s the difference between leasing and financing a car?” In this article, you’ll look at different elements of leasing and financing to determine which option is the best route for you.
Defining Terms
Leasing a vehicle is similar to renting for a fixed term. You’ll sign the papers and make monthly payments as usual; however, you’ll return the paid vehicle and restart the process with another car.
Financing a vehicle would mean buying it with an auto loan. Payment plans usually require monthly installations until you pay the loan in full. Afterward, the car is yours to own.
Payments
Typically, lease payments are lower than finance amounts. During a lease, you pay for the value utilized during the time of driving instead of the entire car.
When financing an automobile, you repay the lender the base amount, plus interest. Unlike leasing, the lender owns the vehicle while you continue to pay monthly.
Customization
There is limited customization with leased vehicles; you can customize the car with approved accessories from your auto dealer. However, you can customize a financed car to your liking at any time.
Mileage
Upon starting your lease, you’ll come across varying mileage options that may fit your lifestyle. You are responsible for overages and their corresponding charges when you exceed your mileage limit unless you decide to buy the vehicle.
Conversely, a financing automobile can accumulate as many miles as the driver would like. However, outstanding mileage amounts can lower the car’s resale or trade-in value.
Wear and Tear
You can expect normal wear and tear coverage with leased vehicles. But if wear and tear exceed the typical limits, you’re held responsible for covering repair costs.
While there are no additional charges for a financed vehicle’s wear and tear, excessive damage also affects your vehicle’s resale value.
Learning the difference between leasing and financing a car is essential to determine which choice suits your lifestyle and long-term intentions better. If you enjoy the perks of having a new vehicle every few years, then leasing would be a feasible choice.
On the other hand, if you intend to purchase a vehicle and use it for years until it’s no longer operable, you’ll want to apply for an auto loan. In this case, consider Superior Financial Services. We work diligently to give you a same-day decision on convenient installment plans.
