Making a choice between car finance and car lease is a daunting task. It is like when you are purchasing a pair of shoes. Most automobile experts have different opinions on the topic. However, you are the only one who can scoop the appropriate advice.
A car lease does not make you the owner of a vehicle. You are entitled to use the car as you desire. Nonetheless, you are required to return the vehicle once the stipulated lease period expires. However, some contracts contain a purchase option. This can enable you to purchase the vehicle in the course of the lease period or after it expires. On the other hand, car finance enables you to purchase a vehicle. The financing contract allows you to own the vehicle fully on paying the amount of money owed.
There are so many costs involved in leasing a vehicle. This may include registration fees, taxes, down payment and security deposits, among other charges. These must be paid before one takes possession of the vehicle, which may prove expensive. However, if you finance your vehicle, you incur less upfront charges. In fact, you only pay a down payment or a cash price, registration fees and taxes.
Do you know that if you lease a vehicle, you only pay for the vehicle depreciation costs during the lease period? Besides, you pay less rent charges or interest and other charges that may be owed. This usually reduces your monthly payments for the vehicle and is much lower that buying a vehicle through car finance. In this case, one must pay the entire purchase price, taxes, interest and other fees. One may end up making more monthly payments.
Leasing allows you a better opportunity to early termination of the contract. Indeed, it only attracts a charge for early termination. However, if you are buying a vehicle, it is not easy to terminate the contract early. This is because early termination would require you to settle the outstanding balance first. Besides, it would attract prepayment penalties.
Car lease limits your mileage. However, some contracts provide channels through which higher mileage can be negotiated. Nonetheless, this comes at an extra fee, which may be expensive. This has been a bother to most people because such fee is usually demanded at the expiry of the contact, which has caught them unaware. On the other hand, buying a car presents many opportunities. One is not restricted on the mileage. Besides, you can resell or trade-in the vehicle at your will.
Automotive experts argue that auto financing is a term that has been misunderstood for long. However, those who understand how it really works have found it easy to make decisions between buying and leasing a car. All you should understand is that car dealers are not capable of financing your car lease or car finance. However, they can affect your auto financing and other charges such as interest rates. We have explained what we think will help you shun costly mistakes.