You’re probably in need of a car right now and wondering what should be best: leasing or financing. Most people wonder about these two options, if they don’t have enough money to pay for a vehicle in cash. While financing is the most common way to go, about 20% of people still choose the leasing option.
Each method is very different. In the following paragraphs we’ll help you decide which is best according to your needs.
Choose leasing if:
You enjoy that new car smell. If you like to update your vehicle every few years or so, this option is for you.
You have a hard time committing. Leasing is like renting a house; while you’re paying money for the privilege, you never really own it. You’re paying for the luxury of having an updated vehicle, which you’ll probably switch every couple of years.
You want warranty coverage at all times. When you lease, your car will likely always be under warranty. You don’t have to worry about major mechanical problems, just as though you owned a new vehicle.
You want lower payments. The great thing about leasing is that you don’t usually have to give a down payment, and month-to-month payments are about 30% to 50% lower than loan payments on the same car.
You don’t want to worry about selling. Selling a car requires work. When your lease is up, you just return it back to the dealer.
Choose financing if:
You want to own but can’t pay in cash. Once you make all of your payments, the car is yours.
You don’t mind paying a down payment. When you finance a car, you usually have to pay 10-15% as a down payment.
You want unlimited mileage. When you lease a car, you are limited to a number of miles you can drive per lease period. Owning a car gives you absolute control to travel whatever distance you choose.
You want to personalize your car. Leases usually forbid any sort of car modification. When you own a car, you can upgrade, change the wheels, make it your own.
You want to improve your credit score. When you finance, you are using someone else’s money to pay for the car. Make your payments on time and you could see your credit improve over the years.
You want basic car insurance. Owning a car gives you the liberty to pick any type of insurance you want. Lessors usually ask for more comprehensive policies.
Take a look at what your needs and preferences are before you make any decisions. And don’t forget to shop around!